Dec 9. Fixed income regains losses from NFP

–Yields dropped yesterday as stocks slumped and the dollar rose. 

The sell off from Friday’s better than expected employment report was erased as tens traded the same level as late Thursday.  Ten year yield closed 3.39% in front of today’s auction.

–(AP) President Barack Obama outlined new multibillion-dollar stimulus and jobs proposals Tuesday, saying the nation must continue to “spend our way out of this recession”. While that quote might provoke a negative response, some of the specific ideas are the best yet for dealing with economic problems (if they can be implemented), notably…”proposed an elimination of fees on loans to small businesses, coupled with federal guarantees of those loans through the end of next year.”

–That news, while bullish for stocks, was overshadowed by a downgrade of Greece, negative comments by Meredith Whitney on the financial sector (credit losses to rise “meaningfully”), and continued strength in the dollar, which regained levels from early November. Gold fell $35. State of Illinois general obligation bonds were also downgraded by Moodys.

–3 year note found solid demand with a yield of 1.223%, the low in Dec 2008 was 89 bps.  Fixed income allocation is also eroding equity support at the margin.

–Japan growth revised much lower to 1.3% from initial estimate of 4.8%.

–Trade data today along with ten yr note auction. Bond auction tomorrow.

Posted on December 9, 2009 at 6:16 am by alexmanzara · Permalink
In: Eurodollar Options

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