April 2. ISM weaker than expected yesterday, Europe data weak this morning

–ISM was weaker than expected yesterday at 51.3 vs 54.2 last, supporting a rally in fixed income.  Ten year yield fell 2 bps to just under 1.84.  This morning’s mfg PMI numbers out of europe were weak, with Italy and Spain racing downward to catch France and Greece. (Respective numbers: IT 44.5, 7 mo low, SP 44.2, 5 mo low, FR 44.0 actually up, GR 42.1). By contrast Germany is highest at 49.0, (2 mo low).
–China yuan continues to edge higher vs USD, now at new record high 6.20 as peg was raised.  In N Korea, military maneuvers including those by China and the US are raising risks.
–AAPL resumed its downtrend, not quite through the low of the move, but down 3% yesterday (SPX -0.45%).  Silver and copper did make new lows yesterday, with the latter off 10% in the past 2 months, a red flag for mfg growth.  Factory Orders today expected +2.9 vs -2.0 last.
–Stockton CA bankruptcy accepted by the court yesterday.  No surprise there, but pensions loom as a big issue, as they do in many municipalities.
–On a related note, the sequester is about to bite.  From a friend (thanks Bob),  “I work for the DoD. If they don’t reach an agreement and sequestration becomes a reality, we are going to take a 20% salary hit beginning the pay period April 21. More than 50% of the people I work with are going to stop contributing to their TSP (our 401K plan) accounts. Many are also going to borrow from their accounts. I do not know if this will impact the markets, but the Gov pension plan [owns] about 9% [of the stock market].”  He notes that many employees, military, border patrol etc. were exempted from pay cuts, so the cut is rather large for civilians.

Posted on April 2, 2013 at 5:34 am by alexmanzara · Permalink
In: Eurodollar Options

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