Feb 16. Trend has turned in favor of risk AVERSION
Feb 16. Not much of a net change in US interest rate futures yesterday – FOMC minutes suggested some members saw the need for more bond buying- but there were several things that suggest a turning point with respect to risk assets. First, AAPL had a huge reversal, on heavy volume and a large ($29) range, initially gapping higher but closing with a loss of nearly $12. S&P futures had the same pattern (of course) and closed near the low. As AAPL goes, so goes the US economy…
–Also, during this bout of “risk-off” USD-JPY is rallying to new recent highs at 78.80. Dollar strength underscores risk aversion. Also near contract euro$ vol is maintaining a bid versus reds, an indication of concern.
–The situation in Greece continues to drag on and is near the breaking point. Moody’s warned on a new slew of downgrades for various financial institutions including UBS, CS, MS, GS, C, DB. Near eurodollar contracts are being pressured this morning…feels like the dam may give way. However, longer treasuries aren’t seeing much of a yield decline. Auctions of 2, 5, and 7 year notes next week.
–Today’s news includes Jobless Claims expected 365k. PPI expected +0.4 with Core +0.2. (on a related note, crude oil priced in euro is at a new high), and Philly Fed, expected 9.5 from 7.3 last
