March 15. FOMC next week
–Midcurve eurodollar options expire today, as do equity options. Economic news includes CPI expected +0.5 and +0.2. Empire State 10.0, Industrial Production +0.5 with Capacity 79.4.
–Economic news remains mixed. Stocks continue higher, as does high end real estate, supported by low rates. Things are less good for those under top as employment has only gradually improved. The Fed’s stimulus is supposed to spark ‘escape velocity’, but I think it’s more of a ‘trickle down’ economy, stymied by regulatory uncertainty or outright obstacles. For example, from WSJ: “Employers are bracing for a little-noticed fee in the federal health-care law that will charge them $63 for each person they insure next year.” And David Rosenberg notes that restaurant sales were down 0.7 in Feb after -0.6 in Jan. “Note that this the sharpest two-month decline since January-February of 2008, just as the recession was getting rolling.” [Makes sense as payroll taxes increased and energy costs were increasing]
–Quiet in interest rate futures, though there is a bit of selling pressure on the front end of the curve. The long end is resilient as seen by robust ten year auction demand and support in bond futures even after a mediocre auction. There was a new late buyer of June bond 150c, 8-9 for 5k or more, nearly 9 points or around 50 bps away.
–Not much news in the beginning of next week. FOMC on Wednesday includes econ forecasts and press conference.
