Sept 5. US manufacturing surge as EM falters

–US yields rose yesterday as ISM Manufacturing came out at a blistering 61.3. There has only been one other reading higher this century, 61.4 in May 2004. Increased IG issuance also cited for pressure on FI. Ten year yield up 5.1 bps from Friday’s close, to 290.2. New buyer of 25k FVV 113.25p for 15.5/16.0; settled 16.5 vs 113-065, likely related to a corporate hedge. Continued buying in EDZ8 9750/9762c 1×2 for 1.0 bp; looking for a Fed pause in December due to EM rout.
–Emerging markets continue to wobble with S Africa’s rand plunging to a new low this morning. India rupee also at new low. Heavy losses yesterday in metals. Copper was crushed, testing the low from August. Silver was especially weak, SIZ was down nearly 38 cents yesterday and is off nearly 20% from the high in June. As shown on the chart below both beans and silver are back to the energy induced lows at the end of 2015/start of 2016. Gold/silver ratio is back to the high set in 2008, according to BBG.
–This morning stocks are weaker, as is WTI which failed an early morning rally yesterday right at the high of the range. As the threat of storm Gordon recedes, CLV is down another $1; interest rate futures are attempting to claw back yesterday’s losses. News today includes Balance of Trade.


Posted on September 5, 2018 at 5:16 am by alexmanzara · Permalink
In: Eurodollar Options

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