July 19.
July 19. Rally in fixed income continued Friday, with the 2 yr note reaching a record low just below 58 bps. Ten year note fell around 6 bps to 2.92%.
–Banks were weak. BofA fell 10%, and is at the lower end or the range of the past 11 months. Citi was down nearly 7%, though JPM was down only 3.7%. Some of the weakness in BAC and C rumored to be due to liquidation by Paulson’s fund, also fingered for the plunge in gold. (I read a snippet indicating loss of about $1B of $31B under management).
–Bernanke semiannual testimony to Congress begins Wednesday. Market will listen for hints of the next QE effort.
–From Telegraph: Mystery Trader Buys all Europe’s Cocoa. Someone buying up all the Cocoa in europe (about $1 B worth). I remember reading that it takes about 7 years for a newly planted cocoa tree to produce. Apparently there are fears of reduced yields out of main suppliers, the Ivory Coast and Ghana. In a broader context, many food markets have been exploding higher. For example, Dec Wheat is up 15% in the past 12 sessions (drought in Russia is a factor).
–From Prudent Bear: “In the six years 2001-2006, Total U.S. Mortgage Debt doubled to $14.53 TN.” Seems to me that as housing values have fallen and the new Fin Reg bill encourages higher downpayments, that the size of the mortgage mkt will decline, benefitting treasuries.
