April 13. Fearless?

–USD/JPY down to 109 this morning, with the press pointing to Trump’s comments yesterday that the dollar is too strong.  Obviously there is a flight to quality aspect as well as US tens make new highs, gold is also at a new high for the year.  Somewhat surprising that traders would choose to embrace the currency of N Korea’s neighbor as it threatens to test a nuclear weapon on the [blotted out due to nuclear fallout] Day of the Sun.  The ten year yield was nearly unchanged yesterday at just over 229 at the close of open outcry, but trades 222 this morning.  Eurodollar calendar spreads are imploding with EDM7/EDM8 having settled 37.5 yesterday but printing just 35 currently.

–TYM 127c added another 16k longs bringing open interest to 193k.  While there were examples in both TY and euro$’s of call sellers and put or put spread buyers, to take advantage of elevated skew, those trades are rather dangerous without underlying longs, and can still go pear-shaped pretty easily if market uneasiness turns into panic.  I’ll just give a little example from euro$’s… there had been a reasonable amount of +EDK 9875c vs -2EK 9825c at flat, with some even taking 0.5 credit to sell the green.  As of yesterday’s close with futures 9871 and 9801, the call settles were 2.0 and 3.75, so now greens are over by 1.75.  This morning EDM7 is +1.5 to 9872.5, but EDM9 is +7 at 9808.

–In a vignette that pretty much sums up everything wrong, the sculptor of Wall Street’s iconic charging bull statue is suing because his statue of the Fearless Girl staring down the bull has changed the context of the original artwork.  Mayor DeBlasio helpfully tweeted, “Men who don’t like women taking up space are exactly why we need the Fearless Girl.”  Really? Trump changes the context of his remarks every five minutes. I guess the original Charging Bull was meant to portray the dynamism of the US capital markets, and underlying brawn of the unfettered US economy.  Somehow, it doesn’t seem as if the stock market currently reflects that picture.  Maybe it’s a symbol for today, a seemingly innocent (but defiant) child deconstructing the US capital markets…



Posted on April 13, 2017 at 5:26 am by alexmanzara · Permalink
In: Eurodollar Options

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