Nov 30. Moderate interest rate volume; flatter curve

Interest rate trading was subdued with a tendency toward a flatter curve as the Fed bought back longer maturities.  The Irish bailout was met with less than enthusiastic reception, with stocks lower and the euro coming under heavy selling pressure (broke below 200 day moving avg).
–German unemployment fell for a 17th month, lowest in 18 years according to BBG.  The disparity between the trend of employment in Germany and the US is stark.  I believe it is due to the personal debt overhang and subsequent asset price compression seen in the US that Germany avoided. However, the trend of governments taking on bad private assets and swapping them with public debt/obligations could yet ensnare Germany and France as peripheral economies deteriorate and the core of the EU tries to hold thigs together. 
–Obama proposed freezing the pay of federal workers for two years.  Probably sounds pretty good to the many muni workers who have either been laid off, had pay cuts, been forced to a shorter workweek, etc. 
–News today includes Chicago PMI expected 61.0 and Consumer Confidence expected 52.0.
–Dec/Mar eurodollar spread made a new high as Dec has only 9 days left to converge to libor setting (now around 30 bps).  March dollars remain pressured by funding worries associated with Europe, even though there is little chance of an official Fed hike.

Posted on November 30, 2010 at 9:53 am by alexmanzara · Permalink
In: Eurodollar Options

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