Nov 9. Uncertainty re: QE2 is rising

 Eurodollars sold off yesterday, supposedly sparked by a large seller of EDH1, M1 and U1.  Open interest changes this morning show the following seesaw: H +59k, M -22k, U +28k and Z1 -33k.  Hard to know what to make of it.
–What is certain though, is that QE2 has been met with much skepticism, which has actually created more UNCERTAINTY in the market.  Fed’s Warsh had op-ed piece yesterday that suggested policy could be changed if it leads to a flare-up of inflation.  Fisher said that for the next 6 months, the Fed is “monetizing the debt”…surprisingly candid.  There is an interesting BBG story this morning which cites difficulties of removing excess liquidity, pointing to Sweden’s CB…short term rates have soared, underlining fragile conditions in the financial system (link attached).
–Ironically, an icon of America, Harley Davidson, announced it is building a factory in India, even after Milwaukee made all sorts of concessions to keep the company there.  Coincidentally timed with Obama’s trip?  I thought we were supposed to be seeking new markets, not shifting more jobs overseas.
–New low again in red/green euro$ pack spread at only 52 bps.

Posted on November 9, 2010 at 9:18 am by alexmanzara · Permalink
In: Eurodollar Options

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