July 7.
July 7. Interest rate futures reverted partially back into panic mode, with near contracts moving lower and backs closing higher. EDZ1 closed -2, EDZ2 +3.5 and EDZ3 +6.0. Ten year yield had been at 2.91 at the height of european concern, jumped to 3.20 on Tuesday, and fell back to 3.09 yesterday. There was heavy buying of calls on greens. Green pack settled up 6. TYU 123 straddle opened trading 242, rallied up to 249 and settled 247. There was a buyer of (only 6k) EDU1 9850p for 0.75, a bit of a reach (these puts are being accumulated, open interest over 100k). Gold also reflected paper currency concerns, and is back to the middle of 1480/1560 range. While some financial markets are pricing stress, stocks are remaining well bid. There are reports that Obama is close to proposing cuts in Social Security and Medicare as part of a package to get the debt limit raised which would be a structurally positive development.
–The American Bankers Association reported that consumer delinquencies had a slight uptick in Q1, which I find surprising given relatively strong econ growth in Q1. Crude oil continues to bounce back from SPR release, up about $5-6 bbl from lows made at the end of June.
–Today’s news includes ECB, Jobless Claims expected 420k and ADP report.
