July 24. Ten years are rejecting sub 2.5% level

–Another very quiet day in interest rate futures.  Ten year yield edged just above 2.5% to 2.513 as 5’s and 7’s are slated for auction today and tomorrow. Two year auction was uneventful.
–PMI data for the eurozone turned up, however, the HSBC flash PMI for China fell to an 11 month low at 47.7.  The Japanese election solidified support for Abenomics suggesting more yen weakness to spur exports. Japan’s devaluation to grab export share could easily ratchet up tensions with China as that country’s economy crumbles. In terms of US impact, it may be a negative for US rates at the long end…chance that China pares back US treasury holdings as it tries to prop up its own economy?
–In addition to 5 yr auction, New Home Sales today are expected 481k.
–There’s a story in the Huff Post this morning that Obama is leaning towards Larry Summers to be the next Fed chairman.  In any case, I think an announcement could be made in August, and a post-Bernanke Fed may inject a bit more uncertainty into the markets.

Posted on July 24, 2013 at 5:29 am by alexmanzara · Permalink
In: Eurodollar Options

Leave a Reply