Sept 8. Greece and Ireland flare up
Sept 8. The common theme in the past couple of years of this rolling crisis has been various flare-ups that seem to settle down and then resurface again. European sovereign debt is the current issue, which had remained smoldering after stress tests. Spreads are back out; the beneficiaries are the long end of the treasury market and gold. Near eurodollar contracts reacted negatively, as fears of a credit crunch outweigh the reward of squeezing the last 25 possible bps of upside.
–Another bed of embers (noted by ZH) is the world of municipal finance in the US. Apparently Harrisburg, PA is again nearing bankruptcy. CNBC recently ran a series of clips about states that were running surpluses, I guess to show that it IS possible…N Dakota is apparently $1.2 billion in the black. However, the great City of Chicago runs a deficit of half that amount on its own.
–Huge buyer of EDV 9950/9937p spreads yesterday for 2.0 to 2.5 (about 40k) emphasizes the risk of funding issues in the short end.
–Ten year note auction today, followed by Beige Book.
