Jan 7, 2011. Emp situation. Europe debt problems threaten to overshadow

Employment report today.  NFP expected 140k to 200k, though some estimates are higher after big jump in ADP.  Some huge euro$ options trades.  Buyer of 60k EDM1 9900p 6.5 (exit). Seller of 30k EDU 9937^, adding to short.  Buyer of 30k EOM 9800p 18.5/19, adding to long puts; short the market.
–While the data is likely to support views of a US job market on the mend, it may be overshadowed by the global theme of a revolt against government support of financial firms at the expense of the general public.  It started small with Iceland and Greece, went to Ireland, and now the EU is trying to tackle the issue, releasing a proposal with the suggestion that senior bondholders take haircuts for failing banks. From the Telegraph, ‘There would be a strict ranking of creditors. “Equity should be wiped out before any debt is written down, and subbordinated debt should be written down completely before senior debt holders bear any losses,” said the document.’  Severe budget problems aren’t going away, and creeping austerity measures are meeting resistance.  The government safety net for senior bondholders is fraying.
–The US market responded with selling pressure on front eurodollar contracts, and a bid in treasuries and the dollar.  The dollar index is breaking out to the upside.  A stronger dollar along with CFTC’s proposals to consider position limits could negatively impact commodities that have become darlings of the ETF crowd.

Posted on January 7, 2011 at 6:43 am by alexmanzara · Permalink
In: Eurodollar Options

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