Pushing for an ease

May 16, 2019

–After weaker than expected Retail Sales and Industrial Prod data, the Atlanta Fed GDP Now forecast for Q2 was trimmed to 1.1% from 1.6.  Today’s news includes Housing Starts 1209k, Philly Fed expected 9.0 and Jobless Claims.  In a continuing escalation of the trade skirmish, the US blacklisted Huawei.  As the yuan is naturally pressured to partially absorb declines in trade, it becomes much less likely that a deal will come to a quick resolution as the US will accuse China of ‘manipulation’. Of course, the Korean won has also done nothing but decline since the trade talks fell apart.

–The bid for treasuries remains relentless with yesterday’s gains holding.  USM currently trading at a new high above 150.  Important levels from the end of March are being tested or surpassed. For example, 5/30 yesterday matched the March 27 high of  67 bps.  At that time. red/gold euro$ pack spread had settled 25.375, now 24.875.  The first three one-year calendars at end of March had posted lows of -42, -38.5 and -34.  Now -43.25, -37.5, -32.  Jan 2020 Fed Funds rose 2.5 bps yesterday to a new high of 9793.0, 32 bps lower in yield than the spot May contract (9761).    All near 3 month euro$ calendars posted new recent lows, with the lowest being EDZ9/EDH0 at -15.0. 

Posted on May 16, 2019 at 5:15 am by alexmanzara · Permalink
In: Eurodollar Options

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