Oct 6. New low in dollar as Japan eases

 Some absolutely huge trades Tuesday in the aftermath of Japan taking further steps to ease.  On a block trade there was a buyer of 23k TYZ vs 11.8k USZ.  10/30 yield spread at 125, near recent high.  Huge aggressive seller of TYZ 124/129 strangle from 55 to 45 in size of about 30k. Big seller of EDZ0 9975 straddle vs 9962p at 7.0, about 25k.  Etc. 
–Vol was hammered in interest rate futures, with treasury vol closing at new recent lows.  (TYZ at 6.4%).
–Story on BBG that Illinois pays more interest than Peru and Mexico, and that’s with “Build America” bonds that are partially guaranteed by Fed govt.
–Of course gold and silver made new highs as central banks are in a race to devalue their currencies.  From lows in July (varying dates) to yesterday’s highs I measured percentage increases in several products:  SPX up 15%, CRB up 14%, Gold up 16%, EUR/USD up 14%, Copper up 27% and Silver up 31%.  CNBC hails the rise in US stocks as evidence of strong growth prospects for the US economy.  But in EUR terms SPX is unchanged.  And silver doesn’t exactly have inherent growth properties but it trounces the return on SPX.  Let’s face it, if gutting the local currency was the key to national prosperity, things would be great from A to Z (that’s from Argentina to Zimbabwe).  But rewarding irresponsible risk takers isn’t good policy.

Posted on October 6, 2010 at 3:54 am by alexmanzara · Permalink
In: Eurodollar Options

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