Dec 17. Moody’s downgrades Ireland

Heavy selling pressure on bonds seems to have abated for now.  The only economic news today is Leading Indicators, though Moody’s downgrade of Ireland could negatively impact front end over funding concerns. After the huge move down it’s not surprising to see a bounce; five year note moved from 1.03% to 2.12% in a month and a half, and ended yesterday around 2.06.  Possible weekend bid over terrorism concerns?
–Huge buying yesterday in E2H 9825/9850/9912c fly with extra 9912c, 2.0 paid for 60k.  The top call strike was cover.  There was also a notable buyer of 7k JYH 112p and 1k JYM 110p (notable in the fact that CME fx options aren’t typically very active).  Could it be that the small increase in JGB yields causes a tipping point for Japan’s budget deficit?  Or due to impending China tightening?
–Visa and Mastercard were crushed yesterday as the Fed proposed to limit transaction fees for debit cards.  (-14.5 and -11.5%).  Stock market in general is still firm, though given QE2 and tax stimulus reaction, it appears to be somewhat tired.

Posted on December 17, 2010 at 5:39 am by alexmanzara · Permalink
In: Eurodollar Options

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