Nov 5. Fed speakers support dovish outlook
–Slight rebound in interest rate futures after Friday’s slide. Ten year yield -1.5 to 2.60. New low in the first two one-year eurodollar calendar spreads with Dec 13/14 down 1 at 17.5 and March’14/March’15 down 1.5 at 24.5. The latter compares to March’15/16 at 73.0, a difference on nearly 50 bps as an option on tightening.
–Tapering delay… From BBG: “Monetary policy in the United States is likely to remain highly accommodative for some time,” Fed Governor Jerome Powell said yesterday in a speech in San Francisco. Boston Fed President Eric Rosengren backed further easing to “achieve full employment within a reasonable forecast horizon,” while James Bullard of the St. Louis Fed said in an interview on CNBC he wants the Fed to “meet our goals,” singling out inflation.
–Goldman’s Hatzius looks for the Fed to lower the employment threshold to 6.0% by the March FOMC, citing new papers by top Fed officials.
–Today’s news includes non-mfg ISM expected 54.5 from 54.4. Richmond Fed’s Lacker speaks but not expected to deal with policy.
–Appears to have been some fresh selling of treasury vol, for example TYH 125.5^ settled down 8 at 2’60 on an increase in open interest. Jan straddle also down 8 to 1’62 (5.1 vol); premium quickly evaporates on upticks, reversing bids associated with higher rates.
–Interesting link http://www.businessinsider.com/european-bank-deleveraging-2013-11
