March 8. Some signs of better growth ahead

March 8.  Employment picture was better than expected with NFP -36k.  Stocks rallied, EUR/JPY had a powerful bounce, oil and copper both rose.  In many ways it’s surprising that eurodollars didn’t have more of a pull back, for example EDH1 and EDM1 ended only 10 bps below Tuesday’s settles, which were new highs.  Tens have been in a well defined range of 3.60 to 3.80% and closed +8 bps at 3.68+. 

–Though I am in the “double dip” camp, many indicators presage further economic strength over the near term.  For example, census hiring is going to juice up the jobs picture. I check transport rates on Dryships and Railfax websites and both the Baltic Dry Index and rail traffic have turned up, though from low levels. Oil and copper signal strength.  

–Over the weekend Iceland voters rejected higher taxes as payment for the Icesave debacle.  Sarkozy says EU should support Greece.

–In many ways I view the situation as deterioration at the periphery (on several levels).  Globally, Greece, Dubai, Iceland, etc are seeing increased funding costs and austerity measures that engender protests.  Domestically, US states CA, IL, NJ have serious budget constraints, and there have been college protests and several “one-off” attacks at gov’t offices.  In the business sphere, smaller businesses and commercial real estate have issues. While there have been myriad programs to “contain” these problems, and some have stabilized due to large subsidies, fiscal fixes are running out. The upper tier “core” has been saved for now.  The risk is that the periphery eats into the center.

Posted on March 9, 2010 at 4:40 am by alexmanzara · Permalink
In: Eurodollar Options

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