The Banking and Strategy Initiative

Chillin' out till it needs to be funded

US Economy (EoD Review) : Crude build continued, 30 year yield shoots up to 3.38% (Auction)

A Hurrah for the going away of Daylight Savings as now the EOD review of Economic Data can come to you near market closing on most days. Especially on dull deal days like this as US Deals are down 60% in this quarter except for the few PE deals and mostly court action and the Feds.

The smallish 30 Y US Treasury auction went well with the best Bid Cover ratios in the last 12 months (ttm) and good investor pick up with the yields climbing back from last month’s bottom to the other end of the spectrum, maybe too fast but then there is no chance of new QE happening and the Fed is already worried about climbing down from its $3 Tln balance sheet build up. unlike the UK and Brazil, where the Prince William and Kate Dolls aside, financing government debt is trying some continuingly innovative structures.

I won’t be surprised if the investment bank BTG Pactual is also ina  couple of Government swaps in LAtAm to keep multiple governments well financed and rolling on the development finance as Pension funds get ready for a 100 Y Gilt issue,which Reuters says is a token only (Check BRV on Reuters insider)

Back on the dots of data, the build of Crude Oil inventories was explained by hard data on US refineries running at just 82.7% capacity. The softness is enough to reduce inventories of Petroleum products and Gas, showing the Oil Economy , the Gold Economy and The Deal Economy all moving down in tandem with each other thoughthe lack of Financing in each is for different reasons from retail to QE3 to discouraging attitudes to risk and risk on financing  yet despite the traders already making money in Munis and High yields and Structured Finance deals, Europe the culprit in the last case and thsuis the Deal Economy. Though bullish bets on European companies are stilla good bet to start as the HEDJ ETF ( without the Dollar Euro movement ) is up nearly 10% and can rise a lot according to broker analyssts betting on it. That’s right you know the JP Morgans of the world are also still just betting on their analysis in the new world after thec risis and there is no one who’s got it right all the time.

While on the subject, Dreamworks pulled off another nice one in time like ducks in a row, signing up with Indycar for a movie named Turbo. the Indy 500 though is NASCAR , for those still new to the local US flavours.esp if you have been following F1 like me which also has a new US Team and a US race on the Calendar. I was mystified by Rakonnen joining Lotus. At least Schumacher joining Ferrari was a no brainer three years ago. And Barrichello makes two of my  backed Racing drivers Carlos Montoya and Bar himself in the NASCAR pit.

Sign of fwith dots of data, Gold is back to $1650 I hear..Hear! Hear! and Wheat and Cotton have no real supply shortage so China alone can’t push the price up in one/both on fluctuations in US production, bu tthe year remains good for Agri commodities..I am still tossing the coin on Coffee. ( that is the ETF – JO) I hope you like a cup of joe in the evenings too, because the bells are about to ring!

10 Y yields are up 20 bp to 2.27%, 30 Y up 15 bp to 3.41% and though that means money is leaving bonds, it is good to see yields responding on the upward side rather than like the JGBs relation between demand and yield (still paying you to keep money in the bank and for different reasons than banks in Europe doing the same)

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