Nov 9. Germany concerned about France

–Continuation of yesterday’s action with new lows in the curve, weakness in equity markets. Ten year note closed 1.628, approximately 50% retrace of the July to Sept move from 1.38 to 1.87. 30 yr bond (which sailed through the auction) closed at 2.77 also halfway from July low of 245 to Sept high of 309. (62% retracement levels are 1.57% and 2.70%, which I would expect to hold). Nasdaq was down another 1.4% to 2895, but I think will find support around 2825, approximate level of upward trendline from 2009 low.
–Interestingly, while copper and crude had minor bounces after yesterday’s sell off, gold and silver were quite strong, with former up $20 and latter up 75 cents. Euro continues to weaken.
–New lows again in all back month eurodollar calendar spreads. Red/gold fell 3.75 to 114.625 and red/green is now just above 19, low for the year has been just below 16. Huge buyer of Gold Dec 9862/9875/9887/9900 c condor for 4.5 to 5. New position.
–While data today from China indicate a rebound, other reports reflect weakness. For example, McD signaled an October sales decline because of the weak global economy. Express Scripts CEO cited a slowdown in prescription drug sales due to a weak economy and curtailed hiring or shifts to part time labor. And Europe is still struggling…this from Reuters: “Two officials, speaking on condition of anonymity, told Reuters this week that Schaeuble asked the council of economic advisers to the German government, known as the “wise men”, to consider drafting a report on what France should do.” Not Spain or Italy…FRANCE.

Posted on November 12, 2012 at 7:35 am by alexmanzara · Permalink
In: Eurodollar Options

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