April 29. Big week ahead: FOMC, ISM, ECB and NFP

–The dollar is lower against almost everything this morning, with gold now nearly regaining everything lost on the April 15 plunge.  GCM up 17 this morning to 1470.  On April 12 gold closed around 1500, the day before it was around 1580, so while it’s not as though it has been a complete reversal, the current price is fully 150 higher than the April 15 low.
–I had seen an article noting that gold was losing some of its appeal as the US budget deficit shows improvement, and indeed the US deficit is expected around 6.5/7.0% of GDP as opposed to previous crisis readings greater than 10%.  I didn’t see the specific piece, but heard that Stone/McCarthy surmised that future auction amounts could be cut somewhat.  Of course, if the Fed DOESN’T taper off QE, that would mean monetization of an even greater share of US issuance.
–In any event, Friday’s weak Q1 GDP of 2.5 vs 3.0 expected, spurred a flattening of the curve to new recent lows, with 2/10 down 3 bps to just above 145.  All back month calendars pressed to new lows.  For example there is a large long in EDM15/EDM16 at 47ish, it closed 43.5.
–On an anecdotal level, it’s amazing to see the distortions caused by Fed policy.  A friend has been buying 4-8 unit buildings as rental investments for a while in the Wicker Park, Bucktown area in Chicago.  He had appointments Saturday to see six fresh listings, and by the time of his showings 4 had gone under contract; such is the competition.  I am not saying all of Chicago is intensely competitive, but parts are.  On the other hand, it seems as if loan demand for more productive purposes is sadly lagging.
–Today’s news includes Personal Income/Spending, expected +0.4 and +0.1, with Dallas Fed expected 5.0.

Posted on April 29, 2013 at 5:45 am by alexmanzara · Permalink
In: Eurodollar Options

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