June 24. Continued low vol
–There’s very little comment to make regarding Monday’s price action apart from noting its absence. Option premium continues to erode, with most midcurve euro$ straddles settling 0.5 to 1.0 bp lower. For example, Green Sept 9812.5 straddle which was 37.0 one week ago and dwindled to 32.5 by Friday, closed at 31.5. Miniscule price range in ESU. Sparse volume in treasuries. Bloomberg notes that 3 month $/yen implied hit record low 5.7.
–BOE’s Carney who recently created a stir in short sterling by suggesting that a rate hike might occur sooner than markets expect, sounded a more dovish tone this morning, emphasizing muted wage growth and spare capacity. In the US, hawk Plosser speaks in the morning and Dudley in the afternoon. Economic news includes New Home Sales and Consumer Confidence. Auctions kick off with 2’s, followed by 5’s and 7’s Wed and Thursday.
–The realization of inflationary pressures seems to be gaining currency in the US, and the Fed’s assessments of Q1 growth being held back by weather and now bouncing back is perhaps contradictory with recent higher inflation data being currently termed “noisy”. Gold is up over $5 this morning near 1325, a two month high.
