Aug 29. EM FX… increasing risk

–Yields rose yesterday with tens up 3.6 bps to 288.2.  Consumer Confidence hit a new 18 year high at 133.4.  Stocks remain buoyant, grains. not so much.  Nov Soybeans made a new low settlement at 833 1/4, down 15 cents on the day and down over 20% from the high in May.  A huge crop and the China trade situation are to blame; Dec Corn also testing July’s lows.

–While heavy focus is on China’s yuan, the Turkish lira is again weaker this morning as is the Russian Ruble.  Indian rupee and Indonesian rupiah at new lows for the move today (remember, these are the two countries where central bank heads called on the Fed to stop the taper because of a dollar shortage).  The Brazilian real and Argentinian peso made new lows yesterday.  DXY slightly firmer today.

–Vols firmed in rates yesterday with higher yields.  Today brings the final leg of the auctions with the 7 year (the market often rallies out of the third auction).  Economic news includes the 2nd estimate of Q2 GDP, expected 4.0%.  New high yesterday in EDU8/EDZ8 at 27.25 with just under three weeks to go for September expiry.  EDZ8/EDH9 is 15.5, right at its high, with the latter being a good sale IF one thinks December could be the last hike.

Posted on August 29, 2018 at 5:16 am by alexmanzara · Permalink
In: Eurodollar Options

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