August 9. China growth slowing…

–US interest rate contracts remained under slight selling pressure, underscored by tepid demand for the ten year note auction. Just before the auction the yield was 1.655, but the actual result was 1.68. Treasuries immediately traded to their lows but then modestly bounced back. In eurodollars there has been a buyer of blue Sept (3EU) 9850/9862 put spread with 9850/9875ps, for a price of 4, in size of 50k between Tuesday and Wed. The recent theme has been long liquidation and curve steepening.
–Today’s news includes the 30 year bond auction, Jobless Claims, expected 367k and Trade data, expected -47.5b from -48.7. It’s now about 2 1/2 years since Obama pledged in Jan 2010 that the US would double exports in five years. At the time, exports were running about $140 billion a month. Today’s data is for June, but as of May US exports were $180 billion. Not exactly halfway there, but improvement anyway.
–On the topic of politics, this is a bit dated, but the Obama comment, “…you didn’t build that” when describing business owners contrasts vividly with what his former Chief of Staff Rahm Emanuel says about business. From this June 7, 2012 interview: “I don’t create jobs. The private sector does. But I create conditions for businesses to grow and jobs to be created…” Maybe it would have been better if Rahm was the one that stayed in the White House. http://www.cnbc.com/id/47728576/US_Won_t_Fall_Off_Fiscal_Cliff_Rahm_Emanuel
–China’s Industrial Production growth is decelerating to slowest pace since 2009 at 9.2%. I saw a couple of news clips on weakening growth in China, both of which suggest more gov’t stimulus may result. It’s somewhat ironic that there’s a global call, dependency really, for central banks /policy makers to provide stimulus (a solution) when these same institutions oversaw the explosive debt growth that got us here in the first place. The risk that the market begins to lose confidence and demand higher rates for gov’t paper may be closer than it appears, even for US and Germany.

Posted on August 9, 2012 at 4:50 am by alexmanzara · Permalink
In: Eurodollar Options

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