Oct 6. ECB leaves rates unch’d, adds other liquidity measures

Rebound in risk assets.  Ten year rose 11 bps to 1.90.  Red/gold pack spread leapt 15 to 179.5.
–ZH reports the French govt has contingency plans to nationalize 2 or 3 banks.  Could bank nationalizations be the catalyst that stabilizes things?  Facing the problem and dealing with it might inject confidence back into markets. (Although it doesn’t solve the issue of a hard landing in China).
–In the US focus will be on tomorrow’s jobs report.  Claims today expected 410 from 391.  Every calendar spread in eurodollars is now positive.  The lowest one-year calendar is now EDH12/EDH13 at 3.5 bps, which captures the year just before the Fed’s commitment (in June 2013) to keep fed fund rate low.  From there the spreads gradually increase…EDH13/EDH14 is 49.  Still really low but maybe on  a more normal path.
–There’s a video clip I received of a Judge Judy episode, where a guy is being sued by his girlfriend for not paying rent.  He receives a county subsidy of $450 month specifically for housing, and admits he paid nothing toward rent.  Judge Judy says he’s stealing the county’s money; it’s a disgusting example of what’s wrong with our country’s system of subsidies. 
Then a see this clip in the Wall St Journal: WSJ-More than half of $4 billion in federal funds disbursed this year to spur small-business lending by community banks was used to repay bailout funds that the banks received under the government’s Troubled Asset Relief Program.
–I don’t really know how the above can be documented, but since it’s a nice day maybe I’ll hang out with the protestors for a while on LaSalle street today.

Posted on October 6, 2011 at 8:44 am by alexmanzara · Permalink
In: Eurodollar Options

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