Jan 4. Ten year yield ends year near high yield.

Jan 4, 2010.  Another big sell off in US interest rate futures to cap the year.  Bearish factors included much lower than expected Jobless Claims, though Emergency Unemp Comp hit new record to 4.5 million in the week ended Dec 12.  In all likelihood census hiring will help the employment picture in the first qtr.  Ten year now stands at 3.84%.  Since May it has roughly ranged between 3.2% and 3.9%; now looks poised to seek a higher level as economic data reportedly improves, and as the federal gov’t takes more and more debt onto it’s own (the taxpayers’) balance sheet.  (For example, another infusion into GMAC last Wed of $3.8B, the lifting of GSE caps, transfers to states for unemployment compensation relief). Additionally, increased tension with Japan and China can’t help; US just raised duties on Chinese steel pipes. 

–Bloomberg reports the Fed may engage in some asset sales as liquidity withdrawal. “Devising a plan for pulling back stimulus “is under way intensively on the Federal Open Market Committee,” [former Fed Gov Meyer said].

–Eurodollar calendar spreads make new highs. The highest one year calendar spread is still only 163.5 bps (up 7 on the day), which is EDM10/EDM11.  Also, given lack of end of year pressure, EDU0/EDZ0/EDH11 fly at +3 is perhaps slightly high.

–ISM today expected 53.6 from 54.8 last.



Wash Post  There has been zero net job creation since December 1999. No previous decade going back to the 1940s had job growth of less than 20 percent. Economic output rose at its slowest rate of any decade since the 1930s as well.

December 29 – Bloomberg (Jerry Hart):  “State and local tax collections fell for the fourth straight quarter… Collections in the three months ended Sept. 30 fell 6.7% from the period last year to $266.5 billion…”

ZeroHedge  EUC (Emergency Unemployment Compensation) business is – trust us, it is not that difficult.. And for the week ended Dec. 12 it surged by 191,669 to almost 4.5 million, another all time record. Three weeks ago we were shocked when this number hit the all time high of 4.2 million: in a mere 21 days it has added a whopping 7% to the total.

Chicago Tribune Colorado’s minimum wage going down 3 cents in 2010, first drop in the nation since 1938  (to 7.25 which is natl minimum)

From the AP 

More than 10.1 million people collected jobless benefits in the week of Dec. 12, the latest data available. That’s up by about 200,000 compared with the previous week.

That figure includes 5.3 million people receiving the 26 weeks of aid customarily provided by the states, and 4.8 million people that have shifted to the extended benefit programs enacted by Congress over the past two years and paid for by the federal government. Unemployment insurance averages about $300 per week.

But the extensions are set to expire in February. That could mean as many as 1 million people would run out of unemployment aid in March, according to the National Employment Law Project, a nonprofit group.



Evanston is only cutting around the edges without addressing the crucial issues. Those issues are the same virtually everywhere: Union salaries and pension benefits that are simply out of line with the private sector.

Note from Evanston website: –No COLA this coming yr for all employees  –No merit increases for non-represented employees (step increases for represented employees would continue)  –5% increase to employees for health care  –3 holidays without pay *all dept directors will take 5% pay cut”

Washington Post  The federal government said Wednesday it will take majority control of the troubled auto lender GMAC, providing another $3.8 billion in aid to the company, which has been unable to raise from private investors the money it needs to staunch its losses.

GMAC, which already has taken $12.5 billion in direct federal aid along with other forms of government support, is the largest lender to General Motors and Chrysler dealerships and to their auto-buying customers.


Dec. 31 (Bloomberg)The United Auto Workers union is prepared to take over retiree health-care plans from the three U.S. automakers tomorrow, President Ron Gettelfinger said.

Financial Times —The US will impose tough new duties on Chinese steel piping imports, raising tensions with its biggest trading partner and emerging geopolitical rival.

Bloomberg (China real estate bubble) And jump they have. In Shanghai, prices for high-end real estate were up 54 percent through September, to $500 per square foot. In November alone, housing prices in 70 major cities rose 5.7 percent, while housing starts nationwide rose a staggering 194 percent. The real estate rush is fueling fears of a bubble that could burst later in 2010, devastating homeowners, banks, developers, stock markets, and local governments.

Posted on January 3, 2010 at 11:03 am by alexmanzara · Permalink
In: Eurodollar Options

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