Feb 12.
Feb 12. The EU gave a statement of support to Greece which calmed markets. For one day. This morning euro is at new low as Germany apparently isn’t willing to sign a blank check. In the US, the 30-yr auction pressured interest rate futures, which then rallied after the results. The curve steepened a few bps, with red/gold pack spread up 2.75 to new recent high of 278. Implied vol sank, with back month eurodollar straddles down 2-3 bps. Some selling related to long US holiday weekend; my own conclusion is that the market has no concern of a sharp rise in rates, and is more likely to see a drift to higher prices.
–Today’s news may include Retail Sales (expected +0.5 but may be delayed due to weather), and Consumer Sentiment expected 75.0. Other notes include NJ declaring a state of fiscal emergency (the EU isn’t the only one with out of control member state finances). The Senate rejected a Jobs bill, hoping to slim down the legislation. The Chicago Tribune ran an article on the large supply (glut) of apartment rentals downtown. This last note is interesting in that some analysts thought rents might firm up as people were forced from their bank-owned homes. Rather, the deflationary drip continues to dampen recovery hopes, as renting looks better and better compared to “owning”, with security deposits being waived and deals cut.
