Thursday, June 16, 2011

And the funding crisis goes on...

A new day and new prices.

The near-term 90-day eurodollar contracts keep going down (and rates going up, as shown below) even though more signs of slowing activity come our way (yesterday's Empire and Industrial Production in the US, today the Retail Sales numbers in the UK).

That smells like floating banking bodies around if you would ask me.

And then we have what I feared yesterday: Spanish and Italian 10yr bonds breaking to the upside, shown on the charts down below.

God bless paellas and spaghetti.

*Disclaimer: charts and data are presented as I receive/see them. Sources are usually not checked for validation and my own calculations are of 'back of the envelope'-type. I am aware that some math that I do myself might be wrong and/or misleading to some extent. In financial markets the rate of change of economic data is often more important than the actual level and the perception of 'what is priced in' is more important than 'what is actually going to happen'. This is actually the way people pick entry and exit points. So... yes, sometimes you might say 'This guy is an idiot, this is way wrong!' with a high conviction, being right. Not to worry. Markets are made of expectations and the clash of conviction between its participants. Portfolio managers know that being an idiot is sometimes profitable and being smart is often a bad choice. It is all reality, sometimes good, sometimes bad. By the way: corrections to my analysis and intelligent debate is welcome. theintriguedtrader AT gmail do com

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