Pence called back to help Trump choose more dovish Fed nominees than Lagarde

July 3, 2019

–Yields continue to drop with tens down 5.7 bps to 1.976 Tuesday, and lower yet this morning.   Gold has soared by another $20 this morning to 1427.  Stocks are salivating at the prospect of lower global rates, with Lagarde tapped to head the ECB and Trump nominating doves to join the Fed (Waller and Shelton).  The best line I heard about Lagarde was that she was promoted from bailing out emerging economies at the IMF, to developed economies at the ECB. 

–China Caixin Composite PMI was 50.6 and the Eurozone PMI was 52.1, a bit better than May’s 51.8.   

–EDZ9 9800/9837 call 1×2 was exited 50k with a sale at 7.5 bps, and the roll to higher strikes continues, with buys of EDZ9 9850/9862 call spread just under 1.5 bps (settled 1.5 vs 9805.5). 

–While a long holiday weekend is normally the occasion to preemptively take out a few days of time premium, there is perhaps a bit of risk this time, with the employment data on Friday.  Also, the usual terrorist threats have been issued for the 4th of July holiday, underlined by VP Pence cancelling an appearance in New Hampshire (Live Free or Die) to remain in Washington, and Putin meeting with his defense minister as a Russian nuclear sub caught fire during a “research” mission.  

–News today includes ADP expected +140k.  Job Claims, Trade Balance, Service ISM. expected 55.9 from 56.9 and Factory Orders.

Posted on July 3, 2019 at 5:14 am by alexmanzara · Permalink
In: Eurodollar Options

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