Archive for the ‘Eurodollar Options’ Category
Jan 16. Are the central banks going to save us this time?
–US tens dropped 6 bps yesterday to 177.5 and are down another 5 bps this morning as the surprise Swiss move reverberates through the markets. Once again near eurodollar calendar spreads have made new lows, with peak EDU15/EDU16 at just 73, down another 5 on the day. New low in red/green euro$ pack spread to […]
Jan 15. SNB drops EUR peg. Vote of no-confidence
–The Swiss dropped their EUR peg this morning, sending EUR/CHF from 120 to nearly 85 instantly, now 104ish. US stocks immediately spiked to yesterday’s lows but then came back, now just modestly lower from the close. It seems to me that the decision by the Swiss is essentially a vote of no-confidence in the Euro, […]
Jan 14. Anecdotal evidence suggests slower US retail, slowing home sales and declines in China’s construction
–The European Court of Justice decided the ECB’s QE program is legal…because there’s nothing that can restore confidence and growth like buying BTPs (Italy 10s) at 1.81. Right comrades? In the meantime the World Bank cut the global growth forecast and says the world economy is too reliant on one engine, the US economy. In […]
Jan 13. Extra primo good
–Ten year treasury yield dropped another 6.5 bps to 191 on Monday and is lower yet this morning at 188 in front of today’s note auction (with 30 year bonds tomorrow). Tens have now pierced the intraday low yield of 188.5 from Oct 15 and Dec 6. Crude oil has again gotten slammed to a […]
Equity market warrants caution….
A couple of posts on Zerohedge.com point out overvalued metrics on US equities: http://www.zerohedge.com/news/2015-01-12/us-stocks-most-overvalued-relative-rest-world-history http://www.zerohedge.com/news/2015-01-10/permabull-throws-towel-stocks-are-massively-overvalued-key-multiples-are-post-war-re The latter refers to Jim Paulsen of Wells… I had previously put out this note, summarizing several other metrics indicating overvaluation, noted below. ————————————— Reasons for caution 1) Technicals a) Profits as % of GDP are at record highs (at […]
Jan 12. Lower yields on Friday. New lows in near Euro$ calendars. Watch Financial Conditions.
–First, notes about Friday’s trade. Yields continued to sink, as wage data from Friday’s employment report was weak. Even though several investment banks said that across the board wage declines suggested the data was a fluke, the trend had already been set for the day. Tens fell 4 bps to 197.5. Front end eurodollar spreads […]
Jan 9. Employment day
–Curve steepened yesterday with tens closing back above 2%, up 6 bps at 201.5. Red/gold euro$ pack spread jumped 8 bps to close just above 115. The move is probably best viewed as profit taking in a long downtrend, rather than a change in fundamentals, however, the back end of the curve is still remarkably […]
Jan 8. Brief note; most markets have modest rebounds from recent trends, though NOT the Euro
From Fed minutes: Fed officials saw rate rise before April as unlikely. Not much market movement after minutes were released. Later, from Chicago’s Evans: *FED’S EVANS SAYS RAISING RATES WOULD BE A CATASTROPHE though he also said this year’s growth could be 2.6% and he’s optimistic on the economy. –This morning euro is at a […]
Jan 7. Don’t panic?
–The sense of panic is growing. Stocks are testing mid-Dec lows and in some cases taking that level out, and even trading below October lows (for example GOOG, IBM, GE is close). Junk bond spreads are testing highs from mid Oct. The curve is flattening ferociously. Red/ gold euro$ pack spread fell another 5 bps […]
Jan 6. It’s starting to become unhinged…ten year yield sub 2%
–US ten year yield is back below 2% this morning as oil continues to crash (now below $49/bbl) and stocks press lower. Both the Nikkei and Sensex (India) fell 3% today. Tens yesterday fell over 8.5 bps to 203.5. The curve is getting crushed, with every back spread at new lows. 5/30 is only 104 […]
