June 22. Moves related to China fizzle
Almost all of the moves initially associated with China’s revaluation reversed. For example, gold was up $5 early but closed down $25 on the day. Stocks were up but gave away all gains. The euro slid. BP was down 4.7%. According to zerohedge Moody’s put out a piece detailing widespread ramifications if BP goes bankrupt. Which leads to the next item: White House Budget Director Peter Orzag leaving the admin.
–Today’s news includes the 2 year note auction. Existing Home Sales expected 6.12 M . Richmond Fed index.
–EDZ0 9950c paper paid 1.5 for 40k (new position). EDN0 9950c paid 0.5 for 10k. Implied vol was crushed in eurodollars with most straddles down 2-3 bps.
–The curve was a couple of bps steeper with 2/10 up 2 at 253. Ten year note had a nice rebound from its worst levels of the day as stocks faltered. Red eurodollars continue to make new highs in spite of treasury auctions this week.
