Jan 9.

–Employment report was stronger than expected (NFP 200k and rate of 8.5%) but yields ended the day lower, with tens down 3 bps to 1.96%.  Key support of the bond market due to safe haven flows from europe and worries about mideast tensions.  Potential QE is also a factor, though far from certain: 
(Reuters) – Signs the U.S. recovery is gaining strength suggest the Federal Reserve may not need to buy any more bonds to spur growth, a top policymaker [St Louis Fed’s Bullard] said on Saturday…”I don’t think it’s very likely right now because the tone of the data has been pretty strong” through the end of 2011 and up to now…
–The US is facing its own Greece…(UPI) — Moody’s Investors Service said it reduced the credit rating for Illinois from A1 to A2, citing troubles with its pension plan….Moody’s noted Illinois, although it raised state income tax rates and business tax rates last year by 67 percent and 30 percent, respectively, took no steps to correct problems with its pension plan, the Financial Times reported Saturday. 
–The difference is that the US Federal gov’t can unilaterally take steps to bail out Illinois.
–Treasury auctions 3’s, 10’s and 30-yr bonds this week.  Fed speakers almost every day this week.

Posted on January 9, 2012 at 6:53 am by alexmanzara · Permalink
In: Eurodollar Options

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