May 11. Oh SNAP

–Financial conditions getting more air time… Goldman also notes that conditions have eased in the wake of previous hikes, not the response the Fed intended.  However, BBG reports that the rates on student loan debt are increasing going forward, up 0.69% from 3.76 to 4.45.  I believe that’s for new loans, not for the $1.4 TRILLION outstanding.  Math problem: how much will the increase in interest rates leave me for spring break and beer?

–Snapchat also felt a tightening of financial conditions with the evaporation of $6 billion in market cap, almost 1/4 of its previous value.  And a friend (thanks JW) sent an article noting that Moody’s was downgrading Canadian banks as the value of underlying assets may become impaired.  BOC’s Poloz said the CB can’t use interest rate policy to affect housing in just one city (Toronto)… but doesn’t it all come back to lending standards and macroprudential policies that were all the rage in the past few years?

–Hartford CT prepares for bankruptcy as high-income taxpayers either leave the state or report less income.

–In futures markets the easing of conditions is apparent in the collapse of libor/ois and buying in front EDM7.  Although odds of a hike as represented by FFN7 haven’t really changed (settled 9889, around 85% odds of a June hike), EDM7 is only about 13 bps lower in price than where EDH17 expired.  According to open interest sheets, 67k puts were exited in EDM, though the futures barely show any change at all for the past 2 days, so that data is suspect.

–Oil rallied over $1 bbl yesterday and is continuing to add to gains this morning.  Today features the 30 year auction, preceded by Jobless Claims (245k) and PPI, expected +0.2 both headline and core.

Posted on May 11, 2017 at 5:21 am by alexmanzara · Permalink
In: Eurodollar Options

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