June 28. No good news…

 Interest rates fell as talk of another round of QE circulated, of up to $5 TLN. Nobody seems to be dismissing the idea out of hand…grudging acceptance that further gov’t action is needed.  Bloomberg reports that 46 states face Greek style deficits: “State spending is 12% of GDP.”
–Two year yield has returned to the crisis lows of Dec 2008 at 66 bps. I believe low in ’08 was 64. At that time tens were just over 2%, vs 3.11 now.
–New low in EDZ0/EDH1 spread at a mere 6 bps. 
–From a ZeroHedge column: “They [europeans] are performing a bank stress test that appears to be a joke. The results will exclude sovereign risk. Exactly where the risk lies.”
–It seems to me that Europe has adopted the “old” Volcker rule from the early 1980’s Latin American debt crisis…sovereign debt can be marked at par, no matter where it trades in the market. In the same vein, the financial reform regulation moving through congress ignores Fannie and Freddie. Reform, such as it is, nibbles around the edges. 
–A lot of attention being paid to ECRI index, now at -6.9%…near recession level.  Second half growth estimates are being revised lower. 
–News today includes Personal Inc expected +0.5% and Spending Expected +0.2% with Core PCE +0.1.  Friday’s NFP expected -100k with Private payrolls up about 100k.

Posted on June 27, 2010 at 1:16 pm by alexmanzara · Permalink
In: Eurodollar Options

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