Sept 30. Trade wars…ghosts of Smoot Hawley
Sept 30. Big trades all about flattening, althought the curve actually steepened a bit. TYZ0 127c paper paid 1-01 for about 30k (open int up 40k in the strike). EOH 9937c vs E2H 9900c CCM paid 0.5 for 25k, buying the green midcurve call. EDZ11/EDM14 spread sold in size of at least 10k. EDU13 and EDM14 both had open int jump of 10k.
–Could it be that a govt plan to let everyone refi mortgages is driving it all? Swap spreads widen, Curve might flatten initially as MBS holders rush into long end of treasuries to replace lost duration.
–US House of Reps passed a bill to allow trade sanctions against China in a bid to move raise the stakes on trade wars. US also stepping up drone attacks in Pakistan due to european terror plot. Prospect of terror attacks as source of instability again moving towards the forefront.
–More mortgage foreclosures are running into legal obstacles, negative for banks, and of course makes anyone actually paying their mortgage feel like a doofus. Realty Trac says 25% of home sales now foreclosures.
–Plosser against squandering public confidence in Fed by buying more assets. Also, might not have much impact on unemployment.
–Ireland budget deficit to hit 32% of GDP due to Allied Irish and Anglo Irish bank problems. But don’t worry, other european banks are just FINE.
–News today includes Jobless Claims expected 459k. GDP expected 1.6%. Chicago PMI expected 56.0. Bernanke speaks at a “town hall meeting” at 1:30 CST.
