March 9. Liquidity driven trade; NASDAQ at high of year

March 9. For a quiet trading day there seems to be a lot of “big picture” items to note. According to BBG, GSE debt spread to treasuries is at a record low (Barney Frank’s recent comments notwithstanding).

–The Obama administration is unveiling a new plan to streamline short home sales, giving cash compensation as incentive.  Sort of a TARP-lite solution…the lenders won’t like it because the prices are too low, and it may lead to increased supply.  Taxpayers may perceive it as unfair.

–Treasury supply this week, though there seems to be plenty of liquidity. Oil edged a bit higher, gold fell.  Citi (C) was able to close above $3.50, a level that has acted as a cap for the past month and a half.  Compression in GSE spreads to new lows and Citi at new recent highs simply reflects excessive liquidity in my opinion.

–I haven’t done a Google search on this, but the phrase “Cyber Security” is popping up with alarming frequency. A Timesonline article highlights the risk specifically from China, but I think the issue is much broader.  In any event, I think it may become more serious than “conventional” terrorist threats.  Also, this topic may heighten tensions between US and China. 

–One year eurodollar calendar spreads have been in rather tight ranges for 2010 (so far).  For example, EDZ10/Z11 has pretty much been 130 to 150.  Not sure of direction, but I think Q2 may see range breakouts…

Posted on March 9, 2010 at 4:43 am by alexmanzara · Permalink
In: Eurodollar Options

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