March 13. Record IL farmland price/ AIG is back…(risk priced too low)
Mar 13. Retail Sales expected +0.5, and ten year note auction today.
–Spirited rally in fixed income yesterday. The curve flattened with red/gold pack spread down over 6 bps to 168.25. 2/10 treasury spread fell 3.5 to 176.7. Short covering in eurodollars as Friday’s employment data fades from view, though retail sales are expected to further reflect firming economic conditions.
–An article on Reuters yesterday cited an Illinois auction of farmland that went for $15,375 per acre! (a record high for a central Illinois county). I mentioned it to my cousin who told me that around 10 years ago he leased out a small tract at $75/acre, now up to $225 acre.
–The yen looks as if it’s trying to put in a bottom, though probably only a pause in the longer term trend. Everything has been correlated with yen moves recently, and US equities also pulled back from the highs.
–Interesting note on ZeroHedge citing a Kyle Bass presentation last week.
“The AIG of the world is back – I have 27 year old kids selling me one-year jump risk on Japan for less than 1bp – $5bn at a time.”…”And it’s happening in huge size – huge – we bought half a trillion dollars worth of these ‘options’… and interestingly enough, one of the biggest banks in the world called me the other day and asked me if I would close my position – that was an interesting day for us – that happened to me in 2007 right before the mortgages cracked.”
