Aug 24.
The market was again fairly quiet yesterday, with yields edging higher. Ten year rose 5 bps to 214. Five year treasury auction today followed by 7’s tomorrow, and then Jackson Hole Friday.
–There was a reasonable amount of buying of EDZ1 9950/9962c 1×2 for 1.0 (new).
–It feels like there’s a trend toward more official retribution for actions that could be construed as damaging to the financial system. For example, the removal of S&P CEO after the US downgrade. Also, the NY Atty Gen’l (Schneiderman) was just ejected from a gov’t group probing foreclosure fraud, apparently because he wanted more time for investigation, and Geithner wants a speedy resolution (to any problem that could ruffle the current financial architecture). BofA publicly disputed Henry Blodget’s negative claims about the bank’s finances: “Mr. Blodget is making “exaggerated and unwarranted claims,” which is what the SEC stated publicly when he was permanently banned from the securities industry in 2003.” In other words, the SEC/gov’t should take action against Blodget? If gov’t machinery can be mobilzed to reverse the decline of financial shares, then risk assets will again be embraced and confidence will return, right?
