Oct 19. Marginal organic demand, just govt.

Oct 19.  Talk of the Fed engaging in tests for large scale reverse repos flattened the curve.  Red/gold pack spread fell 10.5 bps to 212.   2/10 treasury spread fell about 6.5 bps to 245.  It seems likely that actual liquidity draining operations by the Fed are far into the future, though concerns about the status of the dollar are increasing.  For example, Geithner said on Friday, (Reuters) – “The United States must live within its means once its economy recovers if it is to preserve global confidence in the U.S. dollar’s status.”

–From BBG on Friday:  “The U.S. government’s annual budget deficit widened to a record $1.42 trillion as the deepest recession since the 1930s crippled tax revenue and the administration increased spending to rescue the economy.  The shortfall for the 12 months ended Sept. 30 was more than triple the $455 billion record set a year earlier… During the 2009 fiscal year, revenue declined 16.6% to $2.1 trillion… Fiscal year spending increased 18.2% to $3.5 trillion. Corporate tax receipts declined 54.6% to $138.2 billion during fiscal 2009, and individual income tax collections dropped 20.1% to $915.3 billion.” Note that $1.4T is about 10% of GDP, and the interest tab on the debt at $190B, would be a respectable deficit all by itself.

–(CNN Money) FDIC bank fund in the red until 2012 99th bank closed this year.

–(Fark.com) “When President Obama is being briefed on the collapse of the commercial real estate market, you might want to panic.” An estimated $300 billion in CMBS loans are expected to come due through 2015.  From BBG on Oct 12…“The volume of delinquent commercial mortgages jumped sevenfold last month as borrowers who got loans with lax terms fail to make debt payments amid sinking real estate values, according to Credit Suisse Group AG.  In September, installments on $22.4 billion of mortgages were at least 60 days late, up from $3.2 billion a year earlier… The delinquency rate rose 33 bps to 3.34%…”

–Soros: US economy to be a drag on world growth

–(Chicago Tribune) Ultrahigh-end homes slow to sell in crowded market

“In Lake Forest, for example, more than 50 homes are listed for sale for at least $3 million, not counting homes that are being privately marketed. In the past 12 months, 11 residences in that price range sold, and it took, even with significant discounts, an average of almost 500 days to sell those properties.”

Posted on October 18, 2009 at 5:20 pm by alexmanzara · Permalink
In: Eurodollar Options

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