Levanta hasta que se rompa

 

 

 

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(Bloomberg) — U.S. equities pared early session losses; Netflix higher while IBM’s disappointing results dragged on the Dow.

Geopolitics weighed on risk after National Economic Director Kudlow on Fox Business described China as a problem saying it’s not responding to U.S. requests yet over trade.

The dollar extended gains after FOMC minutes where some Fed officials debated pushing rates into “restrictive territory.”

Turkey’s lira rallied after Secretary Pompeo signaled some sanctions imposed on Turkey could be lifted.

Brazil’s real gained as fund managers surveyed by BofAML are more optimistic about the outlook for the country’s economy.

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Elsewhere, crude prices fell to their lowest in a month after EIA reported a fourth week of U.S. crude buildup.

Treasuries traded heavy before and after the September FOMC minutes, which contained little discussion that warranted aggressive price action. Late equities gains pushed S&P 500 Index back to unchanged and weighed on USTs into cash settlement.

  • Yields were higher by around 1.5bp across the curve; futures volumes were poor, with 10-year note contract running at just around 75% or 10-day average shortly after 3pm ET
  • Fed minutes showed limited insight among Fed officials on the need for an additional IOER tweak by year-end; discussion included no signs “that the upward pressure on the federal funds rate relative to the IOER rate was due to scarcity of aggregate reserves in the banking system”
    • Subsequently, 25k Nov18 Fed Funds futures were sold at 97.81 level around 10 minutes after the minutes were released
  • Treasuries were on back foot leading into minutes as stocks recovered from early losses and USD/JPY rose further.
  • Eurodollar spread flows included 30k EDH0/EDZ0 bought at 1 tick(Source: The Heisenberg Report)
  • Treasuries flattened in early U.S. session, triggered by large TY/WN block trade in futures that pushed cash 7s30s curve below 22bp

Key Headlines:

  • Trump says U.S. needs Saudi Arabia to fight terrorists
  • Carney: U.K. financial system can withstand disorderly Brexit
  • EU commission to reject Italy budget plan:: Spiegel
  • U.S. new-home construction fell in September on a decline in the South

 


-R.W.N II, yours in 322.

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