Jan 11. Portugal accepting aid package?
Interest rate futures continued to firm, with ten year note dropping another 2 bps to 3.30%. New low in EDH11/EDH12 at 57.5 bps, down 4 on the day. There was early selling of midcurve puts which appear to be exits, EOM 9750/9775 and EOU 9750/9800p spd all sold in size of 10k. There was a buyer of 25k EOM 9900/9925c 1×2 (new) and 50k EOH 9912/9925c spd for 5.5, which looks like a roll up of a short from 91 c to 92 c.
–Portugal’s situation continues to worsen; now expected to take an aid package. Japan is pledging to support the euro. Kind of like California pledging to help Illinois. However, India is offering to pay Iran in gold in order to assure continued supply of oil (and avoid sanctions on Iran)…this from a zerohedge piece.
–From today’s Telegraph a nice summation of the euro issue: ‘…the bail-outs themselves – done in the in the name of “saving the euro” – are causing the crisis to spread ever wider by contaminating stronger states instead of separating the balance sheets of good from bad, as would be normal in a debt clean-up operation.’
–Treasury auctions this week. Because of continued european turmoil they should be well received. 3 yr auction today followed by tens tomorrow. Today’s Fed purchase of $7-9 billion of notes maturing in 2016-17. The schedule for additional Fed purchases of treasuries is to be released tomorrow.
