April 22. Pay Commercial Banks to Accept Funding (that oughta do it)
–BoJ meets next week, and sparked a tumble in the yen as it appears they’re considering going deeper down the negative rate rabbit hole. Reuters –
The Bank of Japan, which meets next week, has two lending facilities. One offers banks zero-interest funding for loans to companies in high-growth industries and one provides zero-interest long-term funds to banks that increase lending more generally.
The BOJ would consider applying negative rates on both facilities, Bloomberg reported – paying commercial banks to accept funding.
–Yesterday US yields edged higher on decent volume and some notable put buying. For example, TYM 128p were bought about 30k (open interest up 22k), settled 0’14. FVM 119p settled 5, 15k bought as new position. Ten year yield rose 2 to 187. Eurodollar strip showed similar net changes, reds, greens and golds -1.875 and blues -2.375. GOOG and MSFT reported after the close, and the market was disappointed in both, shaving 6% off GOOG. Early news showed weakening economic conditions. While Jobless Claims fell to multi year lows (ok, we all know that the labor market has improved), Philly Fed sank to -1.6 from an expected 9.0 and Chgo National Activity fell to -0.44, lowest since July of 2013. Should be fairly quiet today with just PMI Mfg flash, expected 52.0. May treasury options expire today, looking to gravitate a bit higher to the 130 strike.
–From the Wall Street Journal – “Suicides in US Climb after years of decline.” Well sure…we’re looking at a choice between Hillary and Trump.
