Dec 2. Atlanta Fed Q4 Nowcast cut to 1.4%. Yellen today

–Yellen speaks today at 12:25 EST at the Economics Club of Washington.  ADP this morning expected 183k.  Beige book released in the afternoon.
–Yields fell across the board yesterday with tens down 6.3 bps to 215.4, as ISM data submerged to below 50 (48.6).  While some people shrug off the data as the US has become much more of a service economy, the Atlanta Fed GDPNow forecast doesn’t see it that way, slashing the Q4 number to just 1.4% from 1.8% a week ago, and 2.9% in the beginning of November.  A paper from the NY Fed yesterday projected somewhat slower growth going forward due to tighter financial conditions.  From Reuters this morning, small business borrowing posted a yoy decline:
The Thomson Reuters/PayNet Small Business Lending Index dropped in October to 131.7 from a downwardly revised reading of 137.9 reading in September. October’s decline of 0.2 percent from a year earlier was the first year-on-year drop since March 2013.”
–The market is still expecting a hike, but all eurodollar calendar spreads made new lows yesterday.  For example, EDH16/EDH17 fell 2.5 to just 59.5.  Red/green euro$ pack spread closed just under 43 bps, down 2.125 bps.  New lows in both 2/10  at 125 and 5/30 at 132.3.  2/10 spread has been lower 13 sessions straight, having been at 146.7 on Nov 11. The market seems to be telegraphing “one and done” from the Fed.
–Big end of day buyer of 50k Green Jan 9787.5p for 1.5.  Exit trade.     

Posted on December 2, 2015 at 4:53 am by alexmanzara · Permalink
In: Eurodollar Options

Leave a Reply