Nov 9. U-6 rate 17.5%. Consumer credit imploding

Consumer Credit declined by a whopping $14.8B, a continued reflection of household sector retrenchment.  Employment report weak, as expected, with weekly hours still at only 33.0, and a new high in the unemployment rate of 10.2%. (U-6 rate, which includes those working part time or underemployed, hit a staggering 17.5%).
–The curve again steepened to a slight new high, with red/gold pack spread at 248.5, up 1.75 bps.
–House passed the health care bill, but as of Sunday evening, there is no real market impact aside from a renewed slide in the dollar.
–3 year note auction today, tens tomorrow.
–The trend continues to be a move toward tresuries and government guaranteed paper (MBS).  As rates on these instruments fall, and the dollar declines, stocks benefit.  The last 4 months of TIC data show that Private (as opposed to govt/official) foreign inflows into equities exceeded treasuries/agencies/corporates.  The largest companies can obtain credit on good terms.  But smaller businesses and households are seeing credit cut off or priced ever higher.  And the healthcare bill should accentuate this trend as companies with payrolls over $500k will be required to provide employee health insurance.

Posted on November 9, 2009 at 5:30 am by alexmanzara · Permalink
In: Eurodollar Options

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