Stocks running out of gas?

April 18, 2019

– -Once again, little net change in interest rate futures, though the curve had a steeper bias in the wake of a Bloomberg article indicating the Fed is embracing the idea of letting inflation catch up with previous shortfalls.  2/10 notched a slight new recent high at 19 bps, up 1.2 on the day.  In eurodollars, there was early buying in deferred out-of-the-money put spreads: +30k 2EN 9725/9687ps for 1.0 and +15k 3EN 9725/9687ps for 1.5.  Both settled 1 vs 9770 in EDU21 and 9762 in EDU22.  EDM9 and EDU9 settled -0.5, all other ED contracts were unch’d to +1.0.

–Equity index futures provided a much more interesting technical backdrop, though ranges weren’t particularly large.  ESM and Russell posted outside days with the former making a new high for the move early yesterday morning.  Both closed lower.  Nasdaq made a new high and closed higher on the day.  This divergence, with speculative flows seeking the ‘safety’ of big tech, may not bode well for the short term prospects of the broader markets.

–Once again German manufacturing data was weak, with the PMI at 44.5, which has provided a bid in fixed income.  Markets are closed tomorrow and may be somewhat illiquid this afternoon.  Today’s news includes Philly Fed expected 10.4 vs 13.7 last.  Retail Sales +0.9; an expected bounce from last month’s weak -0.2.  

–An article on Reuters cites a speech by the NY Fed’s Lorie Logan as saying the Fed may need to buy more bonds than it required pre-crisis.  Not particularly surprising from an operational standpoint, but here’s a link to the speech for anyone needing a nap,

Posted on April 18, 2019 at 5:09 am by alexmanzara · Permalink
In: Eurodollar Options

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