Oct 4. Stocks still under pressure….

–Bernanke speaks at 9 to Joint Economic Committee. ISM stronger than expected yesterday, which cheered the market for all of two minutes.  Stocks fell with many big industrials making new lows…CAT, DD, GE, MMM.  Financials were again crushed. Citi -9.8%, BAC -9.6%, MS -7.7%.   Bonds fell 16 bps to 2.76%, making a new post-FOMC low.  Red/gold pack spread plunged 14.5 bps to 170, with reds down slightly and golds up nearly 14. Ten year at 1.78%.
–(Reuters) – China warned Washington it is “adamantly opposed” to a proposed U.S. bill aimed at forcing Beijing to let its currency rise, saying its passage could lead to a trade war between the world’s top two economies.  Hang Seng index down another 3.4% as of Tuesday morning.
–Dexia, which made the news during the (first) crisis as a top beneficiary of the Fed’s liquidity measures, continues to plunge with Belgium and France discussing a good bank/bad bank solution with state guarantees.
–EDZ1/EDH2 edged to a new high of 6.5. With 3 month Libor setting creeping higher every day, the pressure is mostly on the second quarterly contract (EDH).  3M libor just over 37 bps or 9963, vs EDZ at 9944, representing 19 bps of convergence in less than 3 months makes it hard to short Dec, though there was some Nov put spread buying yest.

Posted on October 4, 2011 at 11:00 am by alexmanzara · Permalink
In: Eurodollar Options

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