May 21. Deflation pressures still abound

The market is screaming deflationary impulses.  Stocks had only a tiny reprieve as EUR staged a strong rally off the lows, but then new selling emerged and SPM made new lows.

–Almost all eurodollar calendar spreads made new lows.  EDZ10/EDZ11 spread is only 70 bps in an environment where some people are still thinking the Fed could begin to tighten next year.  Five year yield sank 9 bps to nearly 2%.  Tens fell 11 to 3.25%.  These are (yield) support levels that currently seem vulnerable.

–Fed’s Turullo says european troubles may spill over into US, derailing economic recovery.

–Within the space of a few week’s we’ve gone from the “flash-crash” to what now may turn into a slo-motion crash as confidence is again drained from investors. 

–Interesting story on Bloomberg that freshly minted Harvard MBA grads are taking an “ethics pledge”, whatever that is. “Don’t forget to tell the client he can switch to a super size order as it’s a better value.”

Posted on May 30, 2010 at 3:36 pm by alexmanzara · Permalink
In: Eurodollar Options

Leave a Reply