July 19.

July 19.  Rally in fixed income continued Friday, with the 2 yr note reaching a record low just below 58 bps.  Ten year note fell around 6 bps to 2.92%.
–Banks were weak.  BofA fell 10%, and is at the lower end or the range of the past 11 months. Citi was down nearly 7%, though JPM was down only 3.7%. Some of the weakness in BAC and C rumored to be due to liquidation by Paulson’s fund, also fingered for the plunge in gold. (I read a snippet indicating loss of about $1B of $31B under management). 
–Bernanke semiannual testimony to Congress begins Wednesday.  Market will listen for hints of the next QE effort.
–From Telegraph: Mystery Trader Buys all Europe’s Cocoa. Someone buying up all the Cocoa in europe (about $1 B worth). I remember reading that it takes about 7 years for a newly planted cocoa tree to produce.  Apparently there are fears of reduced yields out of main suppliers, the Ivory Coast and Ghana.  In a broader context, many food markets have been exploding higher.  For example, Dec Wheat is up 15% in the past 12 sessions (drought in Russia is a factor). 
–From Prudent Bear: “In the six years 2001-2006, Total U.S. Mortgage Debt doubled to $14.53 TN.” Seems to me that as housing values have fallen and the new Fin Reg bill encourages higher downpayments, that the size of the mortgage mkt will decline, benefitting treasuries.

Posted on July 31, 2010 at 8:53 am by alexmanzara · Permalink
In: Eurodollar Options

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