July 1. The curve continued to steepen Thursday…
July 1. The curve continued to steepen Thursday, with 2/10 up 6 bps to 270 and red/gold pack spread up nearly 10 to 284. Just last week Tens had yielded as low as 2.91%, now 3.16%, up another 5 bps yesterday. This move, and the associated powerful rally in stocks, has been dramatic, but nothing like Corn yesterday, which fell over 10% on an increased acreage report. CZ from 650 1/2 to 583! In a world of hedge funds trading across asset classes, those that were on the wrong side of grains may find themselves forced to liquidate unrelated products.
–News today includes ISM expected 52 from 53.5, though Chicago ISM was much stronger than expected at 61.1 (part of the catalyst for yesterday’s sell off).
–Geithner considering leaving (finally). NY Fed halts Maiden Lane (AIG) asset sales. This last item underscores fragility in the system, or at least the notion that everything is ok as long as bad assets are tucked away in a portfolio and not really marked. Sort of like bank owned homes…the market couldn’t handle the flood if all released.
–Municipal problems: MN shut down over budget impasse. Now that Rahm Emanuel actually has a budget to adhere to as mayor of Chicago, he is threatening to fire 625 city workers if unions don’t make concessions. CA hiked internet tax and Amazon says adios. IL still faces loss of business due to recently hiked taxes.
