Nov 17. Risk off

Many crosscurrents in the market, with an aid package to Ireland still up in the air, China taking steps to stem inflation, and vigorous debate about QE2 and the Fed’s mandate going forward (Sen Corker suggesting the Fed should have a single role of targeting inflation).  For me the takeaway is that european problems are going to slog around for years, as are US mortgage issues with robo-signers, etc.  Might not stop growth, but certainly there are what Greenspan used to refer to as “headwinds”.
–Yesterday was a “risk-off” trade, with many high fliers seeing pullbacks extend in fairly dramatic fashion.  Copper was down around 6% yesterday, 10% from the high.  Gold was down $30.  AAPL and GOOG both fell around 2%, a bit more than the SPX.  The dollar was the main beneficiary.  Dollar index has broken above 5 month downtrend. Treasuries firmed slightly, though 30 yr bonds jumped over 2 points from the low.  HangSeng and Shanghai both down around 2% today.
–Implied vol in interest rate futures eased as the bond sell off abated.  Dudley yesterday said an exit from Fed’s easy money policy could be years away.  –Today’s news includes CPI, expected +0.4% with +0.1 Core.  Housing Starts expected 590k.

Posted on November 18, 2010 at 8:55 am by alexmanzara · Permalink
In: Eurodollar Options

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