Nov 4. QE boosts….commodities

 Downbeat assessment of the economy in the Fed statement.  QE package was about as expected at $600 B, putting the Fed on track to become the largest owner of Treasuries behind China. 
–Implied vol was crushed with TYZ straddle losing 20 ticks to close 139, down a full vol.  Eurodollar straddles were also much lower, especially in Green midcurves.  The long bond sold off aggressively after the announcement, with 30 year yield gaining nearly 10 bps to 4.03%. 
–Moves in metals were simply manic, with gold down over $25, but this morning it is up $20 and is higher than Tuesday’s close.  Interesting graphic on zerohedge of year over year changes in commodities: Gain of over 60% yoy, Wheat, Oats, Pork, Cotton.  Over 30%, Canola, Heating Oil, Sugar, Copper, Gold, Silver.  Up 14-25% Corn, Gasoline, NatGas, Beef.  While CPI is +1.1% and the Fed is worried about it falling…
–I am in the middle of refinancing my mortgage.  Not trying to extract any money, just changing the rate from what had been 15 yr at 4.875% to a ten year at 3.625%.  Loan is for less than 25% of value.  So the appraiser came over yesterday, and is going over everything with a fine tooth comb (actually asked if the gutters were copper…”no, I just painted them that way to fool you.”)  The last time I had an appraisal for refi, 7 years ago, they simply drove by and snapped a couple of pictures. Complete 180.

Posted on November 8, 2010 at 4:20 am by alexmanzara · Permalink
In: Eurodollar Options

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