July 26.
July 26. In spite of continued verbal wrangling over the debt ceiling, ten year notes were up only a few bps to 3.00% and stocks were down less than 1%. Some “safe havens” did post new highs, including Gold, AAPL and Swissy. In the US, warnings of catastrophe barely register in the markets. In Europe, where the new Greek bailout “fixed” the situation, we have the opposite effect. In mid July, Italy 10 year reached a high of 5.955%. In the aftermath of the announcement, the yield fell to 5.33. But yesterday it was back to 5.64% Similar movement for Spain…from a high of 6.30% to 5.71, but yesterday back up to 6%. In fact, ZeroHedge had a post that Italy was cancelling bond auctions in August…doesn’t exactly instill confidence. Extending debt in a broken system is a hard sell.
–There were a couple of rumors yesterday of bomb scares, notably in Washington DC, that caused a brief flight into US treasuries. In the aftermath of the tragedy in Norway it’s likely that these scares will occur a bit more frequently as security operations are on heightened alert. Perhaps partially due to this security dynamic and renewed concerns about europe, both bond and stock vol was higher. VIX jumped from 17.5 to 19.35. TYU straddle went from 2’17 to 2’24 interday and closed at 2’22.
–Today includes Consumer Confidence expected 56 from 58.5, Richmond Fed expected at 5.0, and New Home Sales at 320k.
