July 9. Where do I go for safety?

–Weakness in Asian stocks spilled over into the US yesterday, as troubles in Greece, continued sell off in Shanghai, and renewed concerns about energy markets were simply too much for US stocks to fight against.  This morning there’s been a rebound, as China banned shareholders with large stakes from selling.  No gentle nudging into risky assets with expansive monetary policy, like the rest of the world does it.  Just an order to STOP SELLING.  There.  Problem solved.
–Additionally, with yesterday’s computer “glitches” grounding flights at United Airlines, halting trade at the NYSE, and (gasp) taking down the WSJ website,  there were conspiracy theories floating around that hackers are coordinating attacks on US infrastructure.
–In any event, there was flight to quality buying, most notably a buyer of about 30k TYQ 128c for 25/64’s as TYU was trading around 127-06.  The 128 strike represents a yield of around 212.  The ten year (9yr and 10 month auctioned yesterday) closed at 221.5, a bit thru the 222.5 auction yield.  30’s today.  New lows once again in near euro$ calendar spreads, with the peak on-year calendar, EDH6/EDH7 at just 78 bps, down 1.5 yesterday and 7 from last Thursday.
–Today’s news includes Jobless Claims, expected 276k.  Also there are several Fed speakers including Esther George in the afternoon on monetary policy; yesterday Williams said the China market meltdown isn’t a huge issue for the US.  However, the Fed has to be wary of global financial turbulence…certain to be a topic at Yellen’s speech in Cleveland on Friday.  In fact, from February’s semi-annual testimony there was this paragraph warning of foreign challenges:

Foreign economic developments, however, could pose risks to the outlook for U.S. economic growth. Although the pace of growth abroad appears to have stepped up slightly in the second half of last year, foreign economies are confronting a number of challenges that could restrain economic activity. In China, economic growth could slow more than anticipated as policymakers address financial vulnerabilities and manage the desired transition to less reliance on exports and investment as sources of growth. In the euro area, recovery remains slow, and inflation has fallen to very low levels; although highly accommodative monetary policy should help boost economic growth and inflation there, downside risks to economic activity in the region remain. The uncertainty surrounding the foreign outlook, however, does not exclusively reflect downside risks. We could see economic activity respond to the policy stimulus now being provided by foreign central banks more strongly than we currently anticipate, and the recent decline in world oil prices could boost overall global economic growth more than we expect.

http://www.federalreserve.gov/newsevents/testimony/yellen20150224a.htm
Also if you didn’t see on Zero Hedge, this is a mind-blowing website that tracks cyber attacks in real time… http://map.norsecorp.com/
Posted on July 9, 2015 at 5:03 am by alexmanzara · Permalink
In: Eurodollar Options

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