Jan 25.
Jan 25. Stocks were hit again Friday, bringing the loss over the past three sessions to around 5%. Obama’s plan to restrict some trading activity on banks re-introduced the idea that funding may not come quite as easily to trading operations, reflected by slight selling pressure on the front end of the eurodollar curve. However, the two year note yield eased by 3.5 bps to 80.5 in a flow from risky assets to safe ones. The curve was slightly steeper with 2/10 spread up almost 3, just above 279 bps.
–UK raises terror alert to “severe”. Bernanke’s confirmation looking better. Obama’s State of Union speech this week expected to focus on jobs and the domestic economy. Goldman had barricades and bomb-sniffing dogs at NY headqtrs as it prepared to release earnings Friday. Barney Frank says to abolish FNM and FRE and start over. BOJ considering more stimulus measures.
–Late in the day there was a buyer of EDU10 9875p in size of 30k (covering). Also a buyer of EDM10 9900p vs EOM 9675p for a debit of 2.0. It appears that the June puts were a cover but midcurves are new.
There has been concerted selling of ten year strangles, supposedly a west coast bond fund, that added to shorts selling around 6k TYH 116/119 strangle at 35.
