Jan 27, FOMC, more of the same
Jan 27. Not much change in fixed income prices yesterday. The stock market tried to rebound but slid into a weak close, and I doubt today’s FOMC or Obama’s speech is likely to be a catalyst for buyers. Maybe Geithner and Paulson in front of Congress will help! (Watch out below).
–New Home Sales today expected 370k from 355k…still sort of bouncing along the bottom.
–New lows in some of the near eurodollar calendar spreads, with the nearest 1 year spread, EDH10/EDH11 at only 109 bps (-1 on day). Clearly the market does not perceive even a ghost of a chance that tightening is on the near horizon. Continued erosion in implied vol sends the same signal. EDU and beyond straddles almost seem a little high but for the roll up the curve.
