July 23. Economy sluggish

July 23. The message from the US interest rate market is fairly unambiguous: rates are low, spreads are tight, the economy is in for a long slog. 
–EDQ/EDU spread settled -0.75.  Inverted.  All one year calendar spreads are tight.  EDU0 9950c were up 1.75 while EDU was up 2.0 bps.  Sort of underscores the fact that people were leaning the wrong way and are paying up to be out. Three month libor rate set just below 50 bps yesterday. Two year note remains under 5/8%.
–No real news today though August treasury options expire. 
–UK growth better than expected, as is German IFO report. 
–Amazon missed earnings estimate.  Stocks went from 120 to 100 in after hours trade.  Whoosh…there goes 16% and about $8 billion of market cap.  It’s a liquidity inspired market of rapid capital flows, subject to sharp moves.

Posted on July 31, 2010 at 8:59 am by alexmanzara · Permalink
In: Eurodollar Options

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