Nov 24. Theme continues to be questionable lending

The good news is that Existing Home Sales were up 10% and credit card deliquency rate edged slightly lower in Q3.  The not so good news is that China is asking its largest banks to submit plans for raising capital, ironically at the same time the US is pressing TARP recipients about repayment plans.  The WSJ reports that 1 in 4 are underwater on mortgages.  Another piece in the WSJ details how the home buyer tax credit is being used for downpayments, which can nearly completely offset the 3.5% the FHA requires…essentially re-creating the “nothing down” situation that contributes to upside down mortgages and the incentive to walk away. 
–If China, the engine of Asian growth that is pulling the rest of the world out of recession, is concerned about banks’ asset quality related to aggressive lending, then implications for the US aren’t good.
–St Louis Fed Pres Bullard recommends continuing MBS asset purchases.  Gold explodes to new highs.
–Today’s news includes Q3 GDP revision.  5 year auction.  Consumer Confidence expected 47.0 from 47.7.   Case Shiller Home Price Index. 
FOMC minutes late. 
–Curve slightly flatter as auction weighs on shorter end of market in spite of a sickly dollar.

Posted on November 24, 2009 at 6:18 am by alexmanzara · Permalink
In: Eurodollar Options

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