Wednesday, 30 November 2011

Central Banks boost liquidity

A massive pop in the indices on the bank of the liquidity boost. I was too slow to get on the Euro dollar sadly, but I know a few who did and cleaned for the day. Stocks are up huge as I write with the DOW above 400 points up for the day. The stock market has made back 10 days worth of losses in pretty much 3 days. Who said stocks drop faster then they rise, this week the opposite is true!

(from Bloomberg)Stocks and the euro rallied after six central banks acted together to make additional funds available to banks to help ease strains from Europe’s debt crisis. Treasuries fell while the German one-year yield sank below zero for the first time.
The Standard & Poor’s 500 Index gained 2.8 percent to 1,228.46 at 9:41 a.m. in New York and the Stoxx Europe 600 Index surged 2.7 percent. The euro strengthened 1.2 percent to $1.3480. The three-month cross-currency basis swap, the rate banks pay to convert euro payments into dollars, was 134 basis points below the euro interbank offered rate after earlier reaching a three-year high of 163. Oil jumped above $101 a barrel and copper rallied 4.3 percent.
The central banks of the U.S., the euro region, Canada, the U.K., Japan and Switzerland agreed to cut the cost of providing dollar funding via swap arrangements, the Federal Reserve said, and agreed to make other currencies available as needed. China said earlier today it will cut the reserve requirement ratio for banks by 0.5 percentage points from Dec. 5.
“I’m in a better mood today than I’ve been in a while,” Burt White, who helps oversee about $315 billion as chief investment officer at LPL Financial Corp. in Boston, said in a telephone interview. “This coordinated effort is a huge one. It is not a European problem, it’s a global problem. If we don’t get Europe solved, it’s going to send pretty big ripples across the globe. We really could see some upside for the market, if this momentum continues.”

Thursday, 24 November 2011

Wednesday, 23 November 2011

Failed Bund Auction

The euro sank to a six-week low against the dollar in European trade Wednesday as news broke of a poor German government bond auction and after the Bank of Greece warned the country risked exiting the euro zone, reinforcing an already gloomy tone as weak data helped to fan European recession fears.
But the Bund and Euro then plummeted across the board after Germany offered EUR6 billion of new 10-year benchmark Bunds but only managed to sell EUR3.6 billion, prompting investors to worry that the euro-zone debt crisis might even be spreading to its hitherto solid German core.
The Bund dropped over 200 points from earlier morning levels, and is trading 135.30 as I write.
This is worrying times for the Eurozone and this mite lead to more urgent need for some type of Eurozone intervention.
Watch this space

Tuesday, 15 November 2011

MF Global Issues - where is the money!

Its been over 2 weeks since the Mf global bankruptcy but there is still a question where the missing funds are. They still say 600 million is unaccounted for Its been a tough few weeks for me and most likely other traders who had cleared through MF as there is no telling when the funds will be released. So what ever people had in there trading accounts is just sitting there. Also the process of changing clearer is not a quick one so many have been out of action trading for some time myself included.
Its a very frustrating situation and I hope the funds can be rectified soon so that funds can be released.
Its a rough situation and its mainly the little guys getting hurt sadly. Hopefully it can be sorted soon.

Italian yields rise again

MArkets took another dip lower as worries continued over Italian debt levels. Bunds are flirting with all time highs again as we find resistance around 139.06 today. The Euro is heading back down towards 1.35 against the dollar, but its a seen it all before type sceario. There isnt a real push one way or the other and we just playing in a range. The stock markets have rallied quite a bit since the begining of october so it isn't surprising we are consolidating around these levels.

The move today is due to two things: a failed Spanish auction, which sold €3.2 billion of bills, below the €3.5 billion target, with the yield soaring to 5.02% from 3.61% at Oct. auction leading to Spanish 2-, 10-yr yield spreads to Germany both significantly wider to records. The second main factor is the realization that Mario Monti is not the second coming and will in fact face major resistance to form a government. Bloomberg reports: "Monti, a former European Union competition commissioner, struggled to get political parties to agree to participate in his so-called technical Cabinet during talks in Rome yesterday. A government lacking political representation will find it harder to muster support from the parties in parliament to pass unpopular laws. Monti said he’ll conclude his talks today." And if Monti can't do it, nobody can. Which explains why the fulcrum European security, the Italian 10 year BTPs, just fell off a cliff, and is now yielding back over 7% at a euro price of under 85 cents.

Thursday, 3 November 2011

ECB cuts rates

New ECB chief, bold action. Mario Draghi cut rates by 0.25, which was a surprise to the market but shows how he seems to do more then follow the single mandate set by the ECB to inflation under control.
The Euro dropped 50 ticks before instantly fading the whole move, with the second wave being more of a sustained move to the downside.
As you would expect the shorter term bonds had the best reactions with the Schatz spike 14 ticks with a small fade, and the Euribor have 10 to 12 fat tick move. It was very hard to get in on as there was hardly any offers in the market before the announcement.
Spreads rose initially before coming back off, giving good opportunities to sell as we had a nice pop up. This was because Draghi gave no hint that the ECB's bond-buy programme, a controversial tool that has led to the resignation of two German policymakers, would be accelerated despite the chaos in Greece threatening to engulf the much larger economies of Italy and Spain.
The mess isn't over and tricky conditions will no doubt continue.

Tuesday, 1 November 2011

Bunds rally on Italian debt worries

So how about a 400 tick rally in the bunds so far this week! We were looking at top side resistance at 136 area and we have smashed through and back above near the all time highs of this contract trading in the 138s. Not for the faint hearted these moves.
I think 138s-139s will be a very big sticking point as yields will be super low, but if the situation escalates we could see 140s soon.
Italian yields are rising causing alot of concern and pummelling bank stocks. Coupled with the Greek prime minister saying it will have a referendum on the bailout, which is ridiculous. Its laughable really.
Euro traded low 1.36s after being at 1.42s last week. How quickly things change!

Short Sterling spreads nudge higher on hawkish Fed; Walmart blowout

As most must know trading Short Sterling is a bit of a bore, and has been for a while. Having managed to get out of my 2 month hold before,...