Feb 10. Bernanke/ten year auction
Feb 10. Rate futures pulled back on Tuesday, weighed down by treasury supply (10 year today) and a possible bailout for Greece. Today Bernanke testifies before the House on “Unwinding Emergency Fed’l Reserve Liquidity Programs”, also likely to be a bit more negative for the market. However, there is clearly an underlying bid, as evidenced by tight calendar spreads in eurodollars and shallow price pullbacks.
–BofA and Citi were downgraded by S&P yesterday. Both stocks are pretty much at their lowest levels of the past six months, and the financials in general appear weak.
–From zerohedge today: “Asia Times Online is reporting that an explicit directive by the Chinese government has notified reserve managers to sell all risky US assets, including asset backed and corporates, and just hold on to explicitly guaranteed Treasuries and Agency debt.” Whether this is true or not, risk is growing, and the Fed has to supply liquidity. Greek CDS late yesterday was 374 according to BBG. Dubai, who sort of kicked off the current round of sovereign default game, rose to 581. Whether Greece gets a bailout or not, the fundamental problems remain, and are probably going to continue to deteriorate.
–Las Vegas Ritz announced it’s closing. Small story, but illustrates that businesses (and countries) can only hang on for so long without general economic improvement.
