Jan 31. Fed’s Sr Loan Officer Survey positive… for US domestic banks

–The eurodollar curve continued its flattening trend, with red/green pack spd near record low (in the zero rate FF era) of 27.5 bps. Red/blue pack spread fell 2 bps to just over 88.
–The Fed’s Senior Loan Officer Survey was released yesterday, notable for the difference in responses between domestic (US) banks and foreign institutions. Domestic banks were generally positive, noting increased business, slightly easier standards, and firming loan demand in C&I lending. “Foreign respondents that reported having tightened their standards or terms on C&I loans unanimously cited a less favorable or more uncertain economic outlook, and 80 percent cited a deterioration in their current or expected liquidity position.”
–The open question is whether the US substantially sidesteps european problems; the survey appears fairly positive on that possibility, though the absolute level of US interest rates are still indicative of economic stagnation.
–I wasn’t in yesterday to see the flows, but volume in blue euro$ midcurve calls are easily the standout feature (now a regular occurrence) with 188k Blue March and 307k Blue June calls trading. However, open interest in blue june calls was down 68k.
–Today’s news includes Employment Cost Index expected +0.4%. Chicago PMI 63.0 (continued strength), and Consumer Confidence which was 64.5 last and is being forecast at 68.0, (too high).

Posted on January 31, 2012 at 5:29 am by alexmanzara · Permalink
In: Eurodollar Options

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