Aug 2. Treasury yields continue to fall

Aug 2.  Yields continue to drop.  2 year note at only 55 bps.  Ten year yield fell 9 bps to 2.91%.  New lows in nearly all one year eurodollar calendar spreads.  Red/green pack spread made a new low at only 78.5 bps, down 2.75 bps on the day. 
–Grain prices continue to show impressive strength.  Wheat is the leader, having risen about 40% in a month, but soybeans, sugar, coffee, cotton are all at or near new recent highs. 
–Bloomberg reports that Chinese PMI indicates slowing.  US ISM expected today at 54.0.
–The release of Q2 GDP and revisions to previous data prompted more discussion about a “double-dip” or move back into recession.  In many ways it barely matters whether growth is positive or negative, the fact is that a very low growth environment will not do much to lower unemployment or governmental deficits.  Low growth feels like recession. And there is a sense that government actions aren’t helping.
–Stocks are holding their own as earnings releases have generally been good, though mostly due to cost cutting.  Extremely low yields encourage a move into riskier assets, also supporting equities.

Posted on August 1, 2010 at 2:23 pm by alexmanzara · Permalink
In: Eurodollar Options

Leave a Reply