July 13, 2011.
July 13, 2011. Gold soared $23 yesterday as FOMC minutes suggested some members were open to QE3. Up another $9 this morning and over $1570, GCQ nearing new high. Oil had big bounce from lower open and was up 215 late. Grains were higher as well after a lower opening, with notable call spread buying in Dec Corn. Also from the Fed minutes: Europe could cause strains. Not an hour later Moody’s downgraded Ireland to junk.
–Treasury yields continued to edge lower in front of Bernanke’s semi-annual congressional testimony which begins today.
–Dec/March eurodollar spread settled at new low of 3 bps. Curve was flatter with 2/10 nearing a new low for this year (according to my marks). I closed it at 254 with this year’s low at 253…range so far this year has been about 30 bps from 253 to 283. Red/gold pack spread was also lower by 3 bps to 275.5. Year’s range has been wider, from 256 to 301. The fact that the euro$ curve remains relatively steeper is a reflection of flight to quality in treasuries, though at this type of spread I might be tempted to buy 2/10 and sell red/gold.
–Ten year auction today, bonds tomorrow.
–BAC (Bank of America) and MS (Morgan Stanley) both made new lows for the year yesterday.
