April 17. Buyers remorse

–US interest rate futures eased lower as gold and stocks rebounded.  Economic data was mixed, with strong housing starts but less strong permits, better than expected Industrial Production but a negative CPI print of -0.2.  Today there are several Fed speakers. Beige Book in the afternoon.
–From Business Insider: “European new car registrations fell by another 10.2 percent in March from the same month a year earlier, marking the 18th consecutive monthly decline…”
–“In order for central banks to achieve their ultimate economic objective – which is growth and jobs – they have to push investors into taking more risk than is justified” says El-Erian in a WSJ interview.  Everyone knows the Fed’s goal is a push for more risk to obtain “escape velocity”.  But the possible next Fed chief, Janet Yellen, yesterday warned about central bank policies:
-YELLEN SEES SIGNS `SOME PARTIES ARE REACHING FOR YIELD’
-YELLEN SAYS LOW INTEREST RATES MAY PROMPT `TOO MUCH LEVERAGE’
–In a way these comments highlight the conflict of the Fed’s dual mandate, growth/jobs, and low stable inflation.  The Fed has chosen to emphasize the former, buying job growth with a purchase price of increased risk, but is now going through classic stages of buyers remorse, because sometimes you DON’T get what you paid for, even if it is $40 billion a month.

Posted on April 17, 2013 at 5:38 am by alexmanzara · Permalink
In: Eurodollar Options

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