Archive for the ‘Eurodollar Options’ Category
June 2. Surging stocks are no help to treasury shorts
–Fixed income settled only marginally lower despite record highs in stocks. Once again, the curve edged to new lows for the year. As ADP came out strong at 253k, July FF were immediately sold, and closed down 0.5 on the day at 9887.5. While a June hike is considered a lock, the market is loath […]
June 1. Delinquencies edge higher
–Once again, the curve edged to a new low with 2/10 down 1 bp to 92.2 and red/gold euro$ pack spread 1.75 to 60.625. Stock indexes fought back from early weakness which was spurred in part by JPM’s warning that low volatility had contributed to a decline in Q2 trading revenue of 15%. Large financial […]
May 31. Stocks near new highs, but no signs of inflation…
–Both Bullard and Brainard voiced worries about inflation not reaching target. Here’s a snippet from Brainard’s speech: “…I see some tension between signs that the economy is in the neighborhood of full employment and indications that the tentative progress we had seen on inflation may be slowing. ….it may lead me to reassess the expected […]
May 28. Wasted Words
Can you tell me, tell me, friend, just exactly where I’ve been? Is that so much to ask I’ll pay you back no matter what the task You seem really sure ’bout something, I don’t know. –Allman Bros Band, Wasted Words, 1973 Where have we been in 2017? The chart below summarizes part of the […]
May 25. I just can’t figure it out…
–One of my favorite Far Side cartoons is attached. The perplexed donut shop proprietor. “I’m moving over 500 donuts a day and I’m just barely squeakin’ by.” …as the bloated employee looking on innocently sweeps up. –The owner is the Fed. The helper is the market. You keep making the donuts, I’ll keep eating them. […]
May 24. No cushion / no policy room for the Fed….
–China downgraded by Moody’s in part due to the explosion of debt, yet US stocks are slightly positive this morning. http://www.reuters.com/article/us-china-economy-rating-idUSKBN18K04Q The sell off relating to Trump’s misadventures has been erased. –US rates rose yesterday with tens up 3 bps to 228.3. Auction pressure and buoyant stocks were factors; 5 year auction this afternoon. Fed […]
May 22. 2/10 below 100 bps is NOT a sign of economic confidence
–Crude oil continues to rebound from the plunge in the early part of the month and CLN now trades above $51, having had a close below $46 earlier in May. Canada and Aussie are lagging the bounce, which is likely an indication that the oil run-up will falter. –On Friday yields rose around 1 bp, […]
May 21 weekly – Economy Clouded Even Before Political Risks
Last week I quoted Ben Hunt of Epsilon Theory: “…how is it possible that our capital markets are not similarly gripped by volatility and stress? What is responsible for breaking the transmission mechanism from political risk to market risk?” It was a timely question. Political uncertainties have now spilled over into markets, and the possibility […]
May 19. Don’t ignore flattening curve
–Earlier this year Brazil’s Bovespa index reached a five year high. Yesterday it was down 8.8% on political turmoil involving bribery reaching the highest levels of gov’t. Just a small reminder of risk. In the US interest rate market, changes were much more nuanced. However, it worth noting that back eurodollar spreads edged to new […]
May 18. Political theater
–SPX fell 1.8%, Nasdaq dropped 2.6% and Russell 2.8% as the Trump agenda morphed from economic stimulus to a long parade of investigations and testimony. There’s not much question that a big part of the equity market rally was predicated on tax cuts and growth, so it should be no surprise to see an unwinding […]
