Dec 24. Atlanta Fed GDP Now estimate slashed by 30% for Q4

–Economic news continues to be disappointing.  After yesterday’s releases, the Atlanta Fed GDP Now estimate for Q4 went from 1.9% to 1.3%.  From the release: “The nowcast for real residential investment growth fell from 8.0 percent to 0.9 percent after yesterday’s existing-home sales release from the National Association of Realtors.”  Hasn’t it been the first quarter that has recently been the weak one?
–Yields edged slightly higher yesterday with the 30 yr bond yield testing the 3% level.  Oil continued to rebound, helping to relieve pressure on high yield, in turn helping stocks to rise.  Jobless Claims today expected 270k.
–Premium under pressure as we go into today’s treasury option expiration.  Today’s January 126^ was trading 15/64’s at yesterday’s close with futures right at strike.  I marked USH atm vol sub 10%.
–I continue to read conflicting reports regarding the farce otherwise known as student loans.  There’s a piece on Bbg today that Fitch miscalculated the amount of student loan bonds that they might downgrade to junk…
“In a corrected estimate, Fitch now says the value of bonds on review for downgrade is actually $71.2 billion.”  The debt is not being serviced, which in a way is a reverse form of stimulus.  Here’s a quick link,
The article claims that students will get better service and will be less likely to default because Congress is shifting more of the loans to smaller contractors that have better collection rates.  Does that make any sense at all?  “By directing more accounts to smaller loan contractors, representatives of those firms say, both taxpayers and student borrowers stand to benefit because borrowers at risk of falling behind will get the attention and service they need to make good on their obligations and avoid defaulting on their debts.”  I know I write some stupid stuff from time to time, but if there’s anything this blatant please call me out on it.  ‘Attention and service’ is known as aggressive collections.  JOBS are what helps to service debt.  Maybe those former students can get new jobs as debt collectors.  Oh, and Merry Christmas!

Posted on December 24, 2015 at 5:23 am by alexmanzara · Permalink
In: Eurodollar Options

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