Treasury Trading Update.

One thing to note from our trading floor recall last Friday UBS was selling EDZ11 futures about 23K times vs. buying EDZ13 – EDZ14 and EDU13 futures. Today they sold about 20K more of the EDZ1 futures to buy 20K of the EDM14 futures they initially sold 173 differential price then down to 166.

Elsewhere the curve has flattened quite a bit more as the long end is rallying with no significant pull backs yesterday or today. Today’s included weaker than expected consumer confidence numbers and word from Medley that the Fed would consider some sort of QE at the Nov. FOMC meeting.

There certainly seems to be a lot of qe fever driving rates lower – we do have somewhat of an anomaly with stock prices rallying up to and past the August highs – usually rates are not coming down on treasuries when equities rally. Rates are also well below where they were back in May of this year when commodity price as measured by the CRB index were trading around 250. Currently the CRB has rallied 35 points to 285 and rates instead of moving higher have been declining and futures prices on the 10yr. note are up over 8 points. The dollar index is off 10 points since May and that to me is the story. The race to print money and continue to live off of debt and service existing debts with more debt is a game that cannot go on. But right now we still seem to deify the Fed and Treasury, once that credibility – which has to be waning slips below a 50 reading on some kind of diffusion index – well watch out, yah?

Larger flows from a.m. session today listed below:

9/28/2010
Paper	S	2,500	EOV93c	1	9927.5
Paper	B	2,000	EDH287/90 c strip	14	N/A
Mann	B	1,000	EDZ196/97c1X2	2.5	N/A
New Edge	B	1,000	EDX096/97c1X2	4	N/A
Paper	B	250	EOZ90/92 p 1X2	1.5	N/A
Paper	B/S	250	EDU095 strad	35	^9940
Paper	B	700	EOZ95c	1	N/A
Paper	B	1,000	EOZ85/90 p spread	2.5	N/A
XFA	B	500	EDH1 93/96 strangle	13	9956.5
Mann	B	1,000	EDH3 85/87 c spread	13	N/A
JP Morg	B	2,000	EDZ29900c	3	9869
RJO	S	5,000	EOZ90/93 strangle	8	9929
Paper	B	10,000	EDZ29887c	7.5	9870
New Edge	B	20,000	EDZ2 88c	7.5	^9870  28%
Paper	B	2,000	EDZ096/97/98 c fly	5	9963
Paper	S	1,000	EDZ2 9900c	4	9872
straddles:
edv0 9962 4.25/4.75  f=9963
edx0 9962 9/10
edz0 9962 12/12.5                       shorts
edh1 9962 17.5/18    f=9957
edm1 9950 29/30      f=9950            EOV 9925  10.5/11.5
edu1 9937 40/41      f=9941            EOX 9925  15.5/16.5
EOZ 9925  20.5/21
reds                                      EOH 9912  34.5/35.5
edz1 9925  51/52      f 9930            EOM 9900  49/50
edh2 9912  61.5/62.5   f=9916.5         EOU 9875  61/62.5
edm2 9900  72/73       f=9902
edu2 9887  83/84       f=9888
5yr. Opts
Paper	S	500	FVZ119p	0.13	N/A
10yr. Opts
Paper	B	500	TYZ127/128/18.5/129/5 c condor	0.09	N/A
CCM	B	3,000	TYZ127.5c	0.48	12530.5
Paper	S	5,000	TYZ0121p	0.09	^12600.5
Paper	B	2,000	TYX126c	0.61	^12607
Paper	B	1,500	TYX126c	0.63	12608/08.5
30yr.
Paper	B	500	USZ130p	1.35	^13304
Smith B	S	7,000	USX133/134 c spread	.31 and .32	13322 area
TJM	B	2,000	USX137c	0.33	13328/29
Yield Curve
UBS	S	15,000	EDZ1/EDM14 futures spreads	173-171-166
Fed Fund opts
Paper	B	500	FFK62/81 p1X2	0.25	N/A
Tradelink	B	1,000	FFG81/87 c sprea	2.5	N/A
Tradelink	S	1,000	FFJ82/87 c spread	2.5	N/A
Mann	B	200	FFJ81/87c spread	1.5	N/A
UBS	S	15,000	EDZ1/EDM14 futures spreads	173-171-166

 

Comments

[V07768198309]

_______________________________

Tract on Monetary Reform
_______________________________

Credit is Like Nostalgia:

It is prone to lead to procrastination and prevent us to go forward!
_______________________________

Our economy is slowly dying, your job, lifestyle are dominated by anxiety.

The economy is kept alive artificially.

No one is proposing a solution because no one has the slightest idea of why it is happening and many have vested interest in the present system.

However an objective observation of the phenomenon can help us understand it and provide us with an innovative solution.

Of course we can't solve the problem with the tools that brought us there in the first place and we need a new ideology.

_______________________________

- Do you feel that your ideology pushed you to make decisions that you wish you had not made?

- Well, remember that what an ideology is, is a conceptual framework with the way people deal with reality. Everyone has one. You have to -- to exist, you need an ideology. The question is whether it is accurate or not. And what I'm saying to you is, yes, I found a flaw. I don't know how significant or permanent it is, but I've been very distressed by that fact.

- You found a flaw in the reality...(!!!???)

- Flaw in the model that I perceived is the critical functioning structure that defines how the world works, so to speak.

- In other words, you found that your view of the world, your ideology, was not right, it was not working?

- That is -- precisely. No, that's precisely the reason I was shocked, because I had been going for 40 years or more with very considerable evidence that it was working exceptionally well.

_______________________________

In order to alleviate those economic woes wee need to create, as fast as possible, a new credit free currency that will solve the credit crunch and bring incremental jobs, consumption and investments to the present system.

An Innovative Credit Free, Free Market, Post Crash Economy

Tract on Monetary Reform

http://post-crash.com/credit-free.html

It is urgent if we want to limit social, political and military chaos.

_______________________________

Is the fulfilment of these ideas a visionary hope? Have they insufficient roots in the motives which govern the evolution of political society? Are the interests which they will thwart stronger and more obvious than those which they will serve?

I do not attempt an answer in this place. It would need a volume of a different character from this one to indicate even in outline the practical measures in which they might be gradually clothed. But if the ideas are correct — an hypothesis on which the author himself must necessarily base what he writes — it would be a mistake, I predict, to dispute their potency over a period of time. At the present moment people are unusually expectant of a more fundamental diagnosis; more particularly ready to receive it; eager to try it out, if it should be even plausible.

But apart from this contemporary mood, the ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist.

Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas.

Not, indeed, immediately, but after a certain interval; for in the field of economic and political philosophy there are not many who are influenced by new theories after they are twenty-five or thirty years of age, so that the ideas which civil servants and politicians and even agitators apply to current events are not likely to be the newest. But, soon or late, it is ideas, not vested interests, which are dangerous for good or evil.

_______________________________

Credit Free Economy
More Jobs, No Debt, No Fear.
Prosperous, Fair and Stable.
http://post-crash.com
_______________________________

[KTT]

hello...i have been reading your posts for few weeks now and i must say they are of gr8 help.....evn i noticed flatteners in the m11m12 and u11z12 in chunky sizes on monday....i have a question regarding your view of the correlation btw crb index and treasury yields....i guess it should not hold in scenarios of quant easings.....evn i wanted to ask abt eurodollar spreads...im finding the levels to b really tempting to go for steepening for short term retracement.....whats ur take