March 6. Coincidence? Factory Orders down six months in a row, shortly after oil and EUR topped

–US interest rates edged slightly lower in front of today’s employment report.  NFP expected 235k with a rate of 5.6%.  Ten year yield yesterday fell 1.5 bps to 210.5.  Green euro$ pack was the strongest part of the curve, +3.875.  One year calendar spreads from greens back made new recent highs.
–Factory orders came out yesterday, negative for the sixth month in a row.  Gee, that’s funny, the downturn started just after the euro and crude oil topped last summer.   Jobless claims were also released, back above 300k at 320.  Just remember, employment is a lagging indicator.  Additionally, the absolute number of jobs doesn’t necessarily indicate robust labor markets.  This item is from CIBC relating to Canada, but has relevance here as well: “That means more people are working part-time instead of full-time, more people are self-employed instead of having secure employment and more are in low-wage jobs than at any time in the last 25 years, says CIBC economist Benjamin Tal.”
–The dollar continues to go on a tear, not just against the euro (now under 110), but against emerging market currencies as well.   Brazil raised rates, THAT didn’t stop the fall in the real.  Turkey recently cut, and that most certainly didn’t stop the fall of the lira.  Is China, grappling with their own set of problems, simply going to stand aside and let one export competitor after another (Japan and now EU) depreciate their currencies?
–Huge trading yesterday in December EDZ5 eurodollar options.  The largest trades were exits of 9912/9900 put spreads and 9950/9975 call spreads, both sold at 4 against various futures levels.  Open interest in EDZ5 puts in total dropped 333k and in calls 68k.  Other option activity mostly consisted of call buying/put selling… not exactly a sign of much higher rates in the future.

Posted on March 6, 2015 at 5:29 am by alexmanzara · Permalink
In: Eurodollar Options

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