Dec 21. Spanish ten year at new low, EURCHF new low

After the Fed finished both POMO operations Monday the bond market slid back to close lower on the day.  Stocks were firm. 
–According to an item on CBS News the latest terrorist threat has to do with poisoning food at restaurants.  The report specifically cited salad bars and buffets.  Whew!  That means I’ll be safe with the double cheeseburger, but just in case, hold the pickle.
–EURCHF broke to new lows.  A piece by ICAP on zerohedge noted that this move likely portends renewed sovereign debt fears.
–In the US the fears concern city and state finances.  For example, the State of Illinois is months behind on accounts payable, which is creating hardship on vendors to the state.  Apparently, the state pays a penalty of 1% per month on these late balances to the vendors.  Seems crazy, because the interest rate the state collects on unpaid income taxes is 4%.  In any case, the state is shifting these payables to investors, who, as I understand it, will pay the vendors the amount due, and collect the 1% per month from the state.  This apparently circumvents the political process that would require legislative action to issue bonds at a more beneficial rate (for taxpayers).  One could almost conclude that Illinois couldn’t raise money from the “market” at a rate below 12%….

Posted on December 21, 2010 at 6:52 am by alexmanzara · Permalink
In: Eurodollar Options

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