July 3. Could banking issues in Europe and China pressure short term dollar rates?

–Not much in the way of good news this morning as S&P downgraded Barclays, Deutsche and Credit Suisse.  Tensions in Egypt, Portugal, Greece, etc are sending equities lower.  August Crude traded over 102/bbl.  August’13 crude is trading with a premium of about $8.50 to August’14…this spread was about $4 at the beginning of June, so supply concerns are at the forefront. While the Fed’s Dudley expressed confidence that growth would be much stronger in 2014, it’s not looking so great for the rest of this year.  In response(?) the Obama team delayed rules forcing employers to pay for healthcare until 2015.  New low for Aussie this morning.  Hong Kong stocks down 2.5% as banks weigh down that index.
–The curve edged flatter yesterday and more so this morning.  Tens closed down 2 bps at 2.47.  This morning around 2.44.  Now that the Fed has chiseled away at the idea of guaranteed low funding rates for the carry trade, economic data becomes more important.  Today brings ADP expected 165k, Jobless Claims 345k, Trade balance -$40b, and non-mfg ISM 54.5.
–The highest one year calendar EDU15/EDU16 settled 102 yesterday.  The fever appears to be breaking as it trades 100.5 this morning (high has been 106).
–Shortened floor trade today.  US will have abbreviated electronic schedule Thursday as BoE and ECB meet.

Posted on July 3, 2013 at 5:31 am by alexmanzara · Permalink
In: Eurodollar Options

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