May 5. 30 yr bond yield breaking out
–It wasn’t a particularly busy day Monday, but the US 30 year bond took its cue from the sell off in the German bund, and closed at the highest yield of the year, 287. The previous high of 284 was made on the employment release in March. (Same relative levels in the ten year are 224 for the March high and 213.3 close yesterday, so the breakout is only in the bond so far). USM yesterday traded from an early high of 158-05 to a low of 156-14. The 5/30 treasury spread closed at a new high for the year at 137 (up 5). 2/10 also at a new high 153.8 (up 2.5), and 5/10 at a new high just below 64.
–Option trade further confirmed the downside bias. New buyer of Blue Sept 9737/9800 combo (bought put) in size of 6k. Also a new buyer of 25k 0EZ 9850/9825 put spreads vs 9925 calls for 5.5 to 6.0 ref 9856-57.
–RBA cut rates to 2% though Aussie is up on the day. In another sign of weaker Chinese demand the Brazilian real is continuing its downward trend, softer this morning at 3.0865.
–Today’s news includes Internat’l Trade expected ($42.0b). Service ISM expected 56.5. According to recent data World Trade volumes are growing at the slowest average pace in 35 years. Baltic Dry Index also at or near the lowest level of the year.
