Nov 10

Nov 10. Three year note well received.  Light volume day. Ten year note auctioned today.
–The dollar index made a new low and gold, a new high.  Dollar weakness is once again supporting dollar denominated assets and US stocks. Fed’s Sr Loan Officer Survey showed some improvement; fewer banks tightening credit.  However, credit card terms are getting stricter. 
–New lows in near calendar spreads, with EDZ9/EDZ10 spread down 2.5 to 111.5.  Interest rates are grinding lower; rolling up the curve.
–Interesting article on zerohedge, citing the Guardian, says the IEA  (international Energy Agency) has been inflating oil inventories in order to prevent panic buying related to the stark reality of peak oil.
–I marked ten year treasury to tip spread at a new high of 223 bps yesterday.  This is a signal of inflation concerns going forward, but the absolute level of the ten year tip at only 1.25% suggests that investors are satisfied with extremely low real yields, as long as they are safe.  It seems amazing in some ways.  A foreign investor could see a yield of 1.25% erased in one day of a bad currency move (like yesterday).

Posted on November 10, 2009 at 7:13 am by alexmanzara · Permalink
In: Eurodollar Options

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