Feb 3. Big week ahead with ECB and BoE meetings; US job report Friday
— US yields continued to press lower on Friday with tens down 3 bps at 266. However, TYH put open interest rose nearly 50k with notable buying of TYH 124.5p and 125p which both saw open positions rise >15k. Some near euro$ calendar spreads made new lows, for example EDH14/EDH15 fell 1 to 21.5. This morning Nikkei is down nearly 2% and 10% for the year as JPY has slipped below 102. China Service PMI weak.
–Today’s US news includes PMI and ISM, the latter expected 56 from 57.
–Did Italy send us an engraved invitation to sell EUR? It had been previously reported in December that Italy might revalue the Bank of Italy from €156,000 to €7.5 billion, thus providing a huge capital gain to a couple of large domestic banks, and a gift to the Italian treasury as those gains are taxed. ZeroHedge and Reuters reported this measure (arbitrary revaluation) passed Wednesday, and the euro promptly went from 136.50 Wed to 134.80 on Friday. Sounds like a page taken out of Argentina’s playbook. In late Dec, the ECB…”warned the Bank of Italy to ‘act prudently and in accordance with principles and objectives of the European System of Central Banks’ when effectuating the capital increase.” It might not be the time to own gold in dollars, but in almost any other currency? Even the Chinese yuan appears to be turning (weakening vs $).
Here are links on Bank of Italy: http://www.centralbanking.com/central-banking/news/2321228/bank-of-italy-share-capital-revalued
http://www.reuters.com/article/2014/01/31/intesa-unicredit-centralbank-stake-idUSL5N0L53LR20140131
http://www.zerohedge.com/news/2014-02-01/italy-enacts-most-bizarre-bank-bailout-yet
–ECB and BoE meetings on Thursday, US Employment on Friday with NFP expected 185 to 200k with chance of weather distortions.
