April 12. ‘Risk off’ trades follow averted gov’t shutdown
April 12. Huge reversals in many commodities. Crude oil plunged almost $3, having made a higher high for the move. Goldman apparently made a call to exit long commodities, and there was reportedly a large buyer (100k) SLV July 25p just over 10 cents. (Small delta option, just interesting that some of the ETFs are regularly seeing large macro option trades). Silver had a swing of over $2 from morning high to afternoon low.
–Interest rate trading was very quiet in spite of moves in other markets. Both Dudley and Yellen made dovish comments. Inflation data is out on Thursday and Friday (PPI and CPI). Stocks were higher early, but then faded into the close. Alcoa missed earnings and Japan raised the seriousness of its nuclear disaster to Chernobyl level, so SPs are lower again this morning. The perception that general liquidity might not be as plentiful at the margin may also have a bit to do with the “risk off” trade. A french agency is warning that pregnant women and children should not drink rainwater or eat leafy greens due to radiation threat.
–Iceland again rejected an Icesave package that was less onerous than the first one, leaving the matter to the courts. Ireland is following the same route. It’s difficult to see how austerity measures are going to be accepted across many countries when the populace perceives benefits accruing to the banking class only.
