Borrow while you can

Sept 10, 2019

–Rates rose yesterday with the euro$ strip from reds through golds -7 to 7.5 bps.  Implieds a bit softer on the pullback.  Sept midcurves expires Friday with atm Short Sept and Green Sept 9862.5 and 9875 straddles settling 9.5 and 9.0 respectively.  Inflation data Wed and Thursday, with Retail Sales Friday; ECB also on Thursday.

–Huge jump in Consumer Credit of $23.3 billion, with $10 billion of that in Revolving (to new high).  Corporate bond issuance is also exploding, with $75 billion of investment grade issued last week and a large slate expected this week, as rates are at new lows.  I’m not sure what is driving consumer credit, but in the corporate world, they’re cramming in as much as possible before the refi window shuts.  However, Moody’s downgraded Ford to junk yesterday (no change by Fitch and S&P) while Softbank is urging WeWork to table its IPO due to withering criticism of the company’s model.  There are signs that allocation of capital may become more discerning.  

–Slight risk-off tone this morning with stocks lower and China reporting factory gate deflation with PPI -0.8% yoy.  Today’s US news includes NFIB small business confidence and the 3 year note auction.  

Posted on September 10, 2019 at 5:01 am by alexmanzara · Permalink
In: Eurodollar Options

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