March 29.

 –Interest rates still edging higher.  Ten year note closed nearly unchanged yesterday at 3.45% but came close to 3.5% early in the day.  The curve is flattening modestly. 
–Five year auction today along with Consumer Confidence expected 64 from 70.4.  Bullard also speaks (in his Seven Faces of the Peril paper he had argued for raising the funds rate while increasing QE, different from Plosser who wants to raise funds while unwinding QE). 
–Stocks had a late sell off, oil and other commodities were weaker.
–Just a couple of sideline notes that bear on state finances.  A headline in the FT today: US muni bond demand slips into big freeze.  From the AP, Arkansas has proposed borrowing $346 million it owes to the federal govt for payments to unemployed workers, comparing the 2% rate it can borrow at in the market to the 4% it would have to pay the Feds.  In Illinois, Caterpillar sent a note to the governor as an “olive branch” suggesting it might move from the state because of higher taxes. The themes are 1) borrowing to pay regular bills, and 2) large companies (probably) getting  special incentives at the expense of smaller firms.  CAT’s CEO said he had been wooed by several other states.  Seems like many of the same problems faced by the PIIGS.

Posted on March 29, 2011 at 7:56 am by alexmanzara · Permalink
In: Eurodollar Options

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