May 28. Bonds trade heavy

–First, a bit of Chicago news, where the Blackhawks scored 3 goals in the third to force game 7 on Wednesday.
http://sports.yahoo.com/blogs/nhl-puck-daddy/blackhawks-force-game-7-michael-frolik-nasty-penalty-025518418.html
–Sell in May and go away?  Certainly that’s been the case for the Dow Jones Utility avg which has lost 7.2% this month. The start of May saw it at a five year high of 538 (all time high of around 550 in 2008), and now it’s just below 500.  Does it make a difference that this yield proxy part of the stock market is cratering?  Broader equity indices are rallying, with SP chewing into last Wednesday’s reversal range.
–There is continued pressure in US interest rate products, with tens up to 203 as USD/JPY rebounded above 102 and JGB yields turned back up  (now around 87).  2, 5 and 7 year auctions this week.
–New highs in some of the eurodollar calendar spreads, with EDZ13/EDZ14 up 0.5 to 18 and EDZ14/EDZ15 also up 0.5 to 46.  Whether due to uncertainty about the Fed’s exit strategy, or global capital flows driven by Japan, or just a domestic adjustment of rates that have been extremely low, US bonds trade bearishly.
–News today includes Consumer Confidence expected 71.5, and Dallas Fed expected -8 from -15.6.

Posted on May 28, 2013 at 5:38 am by alexmanzara · Permalink
In: Eurodollar Options

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