Jan 13. Extra primo good

–Ten year treasury yield dropped another 6.5 bps to 191 on Monday and is lower yet this morning at 188 in front of today’s note auction (with 30 year bonds tomorrow).  Tens have now pierced the intraday low yield of 188.5 from Oct 15 and Dec 6.  Crude oil has again gotten slammed to a new low, currently sub $45.  The press is cheering the plunge in the price of the most important commodity in the world, though the last similar move was in the midst of the financial crisis in 2008.  Well, yay…I guess.
–This morning I saw a snippet that Japan’s fives have moved to a negative yield (-0.1%), with a hearty welcome from German Bobl, also at -0.1%.  US 5yr yield is 135.
–All of the front eurodollar spreads made new lows again yesterday.  Once again, the peak one-yr calendar, Sept’15/Sept’16 fell 4.5 bps to a new low of just 84.  Dec’15 to March’16 is the peak 3-mo calendar spread at just 22 bps.  So much for the idea of Fed hikes of 25 bps at every quarterly FOMC…  I recall that Richard Dennis used to say, watch how the market reacts on news.  Well, late yesterday SF Fed’s Williams said June would be the right time for the Fed to consider raising rates.  YAWN. Every time the Fed hints at tightening, long end yields move lower.
–This is sort of interesting: Tiffany fell 14% on disappointing holiday sales.  From a BN story: “The shocking thing was how slow the Americas was,” said Dorothy Lakner, an analyst at Topeka Capital Markets in NY “Given the strength in the economy, given the strength in the stock market, it was setting them up for a really good holiday season.” And, from the company, it’s “planning cautiously as we anticipate significant headwinds from the stronger U.S. dollar against all of our key currencies.”
–The stronger dollar has preemptively acted as a tightening on the US economy.  Additionally the equity market doesn’t appear to have generated strong ‘wealth effect’ spending.  Or maybe it’s just that people were forced to make choices on their consumption.  Rolls Royce had record sales in 2014.  Such a vexing decision, do I buy the jewelry or the Rolls?  …The lobster or the cracked crab.  What do you think? Can’t we have both?  …Extra primo good, Mr Coleman.

Posted on January 13, 2015 at 5:24 am by alexmanzara · Permalink
In: Eurodollar Options

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