Or fester like a sore, then run

February 12, 2021

–Yesterday the 2-year note dropped to an all-time low yield below 10 bps but ended near 11.  The longer end had modest increases, with tens up 0.6 to 115.8.  Large trade in eurodollars was a new buy of 40k 0EU 9950p for 1.5 mostly covered 9976.5, settled 1.25 vs 9977.0.  These are just over one-quarter percent out of the money and expire in September on EDU’22.  Feb ED midcurve options expire today.  March treasury options expire on Friday.  The theme of buying midcurve put structures in greens and blues is relentless, but moving up to 0EU is perhaps a bit aggressive.

–The last couple of days there have been several articles about the drawdown of TGA balances at the Fed (Treasury General Account) and the stimulative effect from these funds being pumped into the economy.  A client asked yesterday if it was ‘double counting’.  I certainly don’t know, but that question is a valid one.  Everyone is well aware of stimulus checks which are soon to be credited to households; these are the funds in part which will be withdrawn from the TGA.  One might make the case that the likely boost from this cash transfer is already in the market, if not yet in the Main Street economy.  Myriad examples of speculative moonshots followed by flameouts in smaller individual stocks is likely reinforcing a ‘zero-sum’ aspect of day trading with the dawning realization that evil hedge funds are not being eradicated.  Rather, the market architecture is simply adapting to let the dreamers who want a roll of the dice to have a go of it, with the encouragement of sycophants like Mark Cuban and others.  If it’s a crime to incite the mob, we have plenty of candidates.  

Posted on February 12, 2021 at 5:20 am by alexmanzara · Permalink
In: Eurodollar Options

Leave a Reply