May 6. Longshots

Zim 100T

 

–First, a bit of good news!  Zimbabwe issues new currency tied to the US dollar. http://www.bloomberg.com/news/articles/2016-05-05/-zombie-currency-printed-by-zimbabwe-draws-scorn-from-critics
So, assuming the normal one to one swap, my One Hundred Trillion Dollar Zimbabwe note (picture attached) now means I’ve achieved financial independence!
–Perhaps I’ll use some of the proceeds to buy US treasuries, like everyone else did yesterday.  The contract pushed to a new recent high, and open interest in TY rose a whopping 63k.  The buyer of TYU 133 calls was back in as well, bringing the total long to about 40k.  The 133 strike is around 1/4% away in terms of yield, so a bit under 1.50% in terms of the current ten year, which closed yesterday at 174.5, down 3.7 bps on the day.  The curve flattened with 2/10 down 1.7 to just over 102 bps.  Red/gold made a new low during the day and closed just over 72.
–Nonfarms expected 200k with hourly earnings +0.3.  As indicated by yesterday’s price action, the risk appears to be a lower number.
–October Fed Funds closed at the highest level since early March at 9953.0, which is less than 11 bps underneath the front May contract.  That is to say, there is less than 50% odds priced into a rate hike at ANY of the next three FOMC meetings.  Somewhat boring.  So, instead, order yourself a mint julep, find yourself in the company of a girl with an outlandish hat and bet it all on Trojan Nation to win.  It’s a year for the longshots!! (Leicester, Trump…)

Posted on May 6, 2016 at 5:23 am by alexmanzara · Permalink
In: Eurodollar Options

Leave a Reply