July 8. Civil unrest

–Today it’s about the employment report.  But the shooting of Dallas police officers with 5 dead is a much larger event for the country and perhaps for the markets as well.  Even prior to this event, Martin Armstrong posted this: “The Federal government is arming every agency from the IRS to the State Department for domestic purposes. This is clearly a response to what they know is coming. There is no question that they are preparing for an uprising.” (thanks Marco)  Flight to safety may take on another meaning (though the market definition may still push ten year yields much much lower).  https://www.armstrongeconomics.com/international-news/north_america/americas-current-economy/us-government-preparing-for-massive-civil-unrest/

–NFP today expected 175 to 185k.  Avg hourly earnings +2.7%.  5/30 made a new low close just below 118 bps.  There was a lot of put buying (as is typical in front of big reports), 0EN 9912p 2.0 paid for about 40k covered 9921-22.  Makes sense to see protective put buying.  The range in TYU for the last employment report in June was 129-27 to 131-02, and the day ended with the ten year yield at 170.  Yesterday TYU6 settled 133-22 with the cash yield more than 30 bps lower at 138.7.  However, France just auctioned 10’s at 16 bps.
–Just a couple of other tidbits.  German export orders were -1.8% (need a weaker euro…).  Also a Gallup poll on daily spending by Americans fell from $95/day in April to $93 in May to just $88 in June.  There appears to be deterioration in trend.  http://www.gallup.com/poll/127544/consumer-spending-weekly.aspx

Posted on July 8, 2016 at 5:18 am by alexmanzara · Permalink
In: Eurodollar Options

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