Risks spreading

January 23, 2020

–The Wuhan virus has caused the Chinese gov’t to quarantine the city (with more likely to follow).  While there are various reports with exact numbers of infected and dead, other sources suggest a far broader risk; hospitals swamped, the virus has spread to every province, “the severity of the outbreak has alarmed China’s leaders.”  When there’s going to be a bad snowstorm in Chicago the supermarkets are quickly mobbed and picked clean; I can’t imagine what a quarantine would do. Global markets are currently taking it in stride, though March WTI crude is making a new low, currently below $56/bbl, nearly $10 below the spike high associated with Soleimani’s demise.  As an aside, palladium posted a new high above $2400, up $59 as of this writing.

–ECB meeting today.  Yesterday the Bank of Canada meeting sparked a rally in BA’s with BAM0 through reds up 8 to 9 bps on a tilt toward future cuts.

–Yields were essentially unchanged yesterday in the US, though there’s a consistent bid in long bonds which have fallen another couple of bps this morning.  Feb treasury options expire Friday.  Yesterday TYG 129.5^ settled 19 ref 129-175, futures exceeded breakeven this morning at 126-265.  TYG 130c trade 5/64’s; the spike Soleimani high was 130-06.

Posted on January 23, 2020 at 5:14 am by alexmanzara · Permalink
In: Eurodollar Options

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