April 8. Ten year rejects 4%, back to 3.86

April 8.  Powerful rally in interest rate futures as Greece deterioration continues. Red eurodollars +12.  Ten year auction saw strong demand (bonds today).  While Hoenig argues that the current low funds rate should be raised from its artificially low level, Bernanke is still concerned about weakness in both residential and commercial real estate, and the employment picture.  There was also a St Louis Fed paper projecting very slow growth in consumer spending.  In connection with consumer spending, an article in Chicago Trib claims a rebound in teenage buying, citing Abercrombie and Fitch exceeding sales expectations and a couple of other retailers saying thing had turned the corner.  However, I would prefer to rely on Consumer Credit data which plunged $11.5b in February, though Jan was revised up by $5b.
–With stocks displaying weakness, coupled with auctions of long dated treasuries, I would have expected the curve to steepen, but it flattened marginally.  2/10 around 280 from 282.  Precious metals were quite a bit stronger yesterday, though copper turned down (from highs) and is lower this morning.   
–Today’s news includes Jobless Claims, expected 436k and auction of 30 yr bonds.

Posted on April 8, 2010 at 5:08 am by alexmanzara · Permalink
In: Eurodollar Options

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