Tuesday, June 30th 2009

Deficit forces California to issue IOUs : FT


Right … trying, then to move on … Month, quarter end (with mediocre) index extensions should continue to keep the Treasury market with a bid, and as we suggested yesterday, when taken in context of a known large buyer – The Fed (today, buys 05/15/2016 – 05/15/2019 and tomorrow they buy 08/15/2019 – 02/15/2026) – we get the joke. This should keep the curve’s bullish flattening momentum in place and our only hesitation is that it seems too easy a game plan. As a good friend always tells us – if the majority were right, the majority would be rich!


Given the holiday shortened week and possibility of an earlier than usual Hamptons Hedge, we continue to think that position squaring AHEAD of Thursday’s NFP will take hold of the market and while we’re impressed at the Treasury market’s ability to keep bid along WITH the stock market, we’re cautious, at best. NOT suggesting we’re bearish, but with recent auctions in the black, this cautious optimism should come as NO surprise. At the very same time we cannot stress enough how tough a time of year this is to come up with an idea that is executable and worth our collective attention, we’ll offer the following update of one of favorites – US vs Europe – in this case the front end, which we offer to you as a way to think about putting on some risk and still getting some sleep at night:



ALSO, if you scroll just down below you’ll find an interesting ‘post’ – The Swap Spread Mambo! Check it out and enjoy …



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