When CBs CUT bond purchases

Oct 1, 2019

–Fixed income under pressure this morning as a Japanese gov’t 10 year bond sale went poorly due to BOJ indicating plans to slash bond purchases.  According to BBG, 10y JGB yield jumped 5.5 bps to -16.

  https://www.bloomberg.com/news/articles/2019-10-01/bond-traders-sound-alarm-in-japan-with-weakest-auction-in-years?srnd=premium
This, just as the Fed is about to increase its bond portfolio.  As we’ve seen, moves toward ‘normalization’ are met with fear.

–Huge drops in precious metals and oil yesterday.  SIZ down 65 cents to just under $17/oz while GCZ9 fell 33.50 to $1473.  CLX9 hit a low of $53.98, almost $10 below the high print Monday 9/16 of 63.89 which followed the attack on oil infrastructure in KSA.  There has been no military response and MBS yesterday said a war with Iran would cause a global economic shock.  The Saudis appear to have capitulated, although odds of further destabilization are likely increasing.  Oil rebounding today.

–Chicago Fed’s Evans has already spoken today and is not anxious to cut rates further, saying that the Fed’s 2% objective can still be achieved.  Bullard and Bowman on tap.  Chicago PMI yesterday fell to 47.1.  Mfg PMI today expected to edge back over 50 from 49.1 last.  Prices were 46.0 last, expected today at 48.5.

Posted on October 1, 2019 at 5:17 am by alexmanzara · Permalink
In: Eurodollar Options

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