Jan 29. FOMC day. Turkey jacks rates by 4.25%

–It’s a conclave of serious people where decisions are made that can truly affect the outcome of people’s lives and fortunes.  SOTU?  Nah, today’s Fed meeting.  Expected to continue on a modest tapering path, especially since Turkey single-handedly stanched all EM outflows by raising rates to 12% from 7.75. Now that’s a bad@ss central banker.
–Interest rate futures were fairly quiet.  Ten year yield fell 1.5 bps to just under 275, right around the midpoint of the past 6 months.  There was a new seller of 20k TYJ 123.5 calls, taking the atm 123.5^ from around 2’00 to 1’58 and shaving a couple of tenths off vol as stocks rebounded.  Economic news remains mixed as Durables printed weak.  Greens outperformed to the upside (+4.75), causing red/green/blue pack fly to close 4 lower at -4.75. Eurodollar options mostly featured position exits, though there was some selling of green midcurve puts vs blues that appeared to be new, in both March and June.  2H 85p/3H 73p and 2M 80p/3M 68p.
–On what may be a quiet morning, here are two links with longer term relevance for the banking industry.  First, Marc Andreessen “Why bitcoin matters” (My conclusion is that given the security and inexpense of even small global transactions, bitcoin could do for banks what the internet did to the printed newspaper).  Second is Reuters, “Exclusive: U.S. banking regulator, fearing loan bubble, warns funds”. “…”Transferring future losses from banks to pension funds does not aid long-term financial stability for the U.S. economy,” [Pfinsgraff] added.

http://dealbook.nytimes.com/2014/01/21/why-bitcoin-matters/?_php=true&_type=blogs&_php=true&_type=blogs&_php=true&_type=blogs&smid=tw-share&_r=2&
http://www.reuters.com/article/2014/01/29/us-banks-regulators-loans-idUSBREA0S0DG20140129

Posted on January 29, 2014 at 5:22 am by alexmanzara · Permalink
In: Eurodollar Options

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