Monthly Archives: September 2012

The MorningSnapshot- 09/18

As many of you are already aware, CME Group decided yesterday to make several cuts due to low volumes and thin margins, and I was one of them. Thank you all for the kind words and show of support. Because of that, and my passion for the markets, The MorningSnapshot will live on. Please keep me in mind for future openings within your respective organizations.

I’m working with Bloomberg representatives today, and should have the full edition of The MorningSnapshot out each morning starting again tomorrow. Today was a bit stressful without my Bloomberg Launchpad.

The MorningSnapshot- 09/17

Sentiment is negative this morning, with European stocks declining from a 15-month high, U.S. equity futures pointing lower, and Asian stocks little changed as concern of a deepening economic slowdown in China overshadowed optimism resulting from the Fed’s third round of easing. U.S. Treasuries were steady overnight after yields on the long-end of the curve surged last week amid concern QE3 may spur inflation; the 5yr breakeven is at its highest level since July 2008 and 10s at the highest since April 2011.

QE3: Bernanke Expands The Fed’s Holdings of Long-Term Securities
The Fed said it would expand its holdings of long-term securities with open-ended asset purchases of $40B in MBS each month as Bernanke seeks to boost economic growth and reduce unemployment. “If the outlook for the labor market does not improve substantially, the committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases and employ its other policy tools as appropriate,” the Federal Open Market Committee said yesterday in a statement at the end of a two-day meeting in Washington. As almost everyone had anticipated, the FOMC said it would likely hold the federal funds rate near zero “at least through mid-2015.”

S&P Downgrades Ignored (Again)
When Standard and Poor decided to strip America of her AAA debt rating, the risk markets’ reaction was muted to say the least. When S&P cut the rating for France in January, along with eight of its euro-region neighbors, it said policy makers were failing to stem Europe’s debt crisis and the refinancing costs for certain countries may remain elevated. However, French President Francois Hollande has seen the cost of servicing his nation’s debt fall since taking office in May. Yields on 10yr French bonds fell to a record-low 2.002% on Aug. 3, from 3.08% at the time of the downgrade. The drop is greater than the fall in the German 10yr bund yield, which fell 52bps to as low as 1.25% Aug. 3, and yields on Treasuries, which fell less than -40bps during the same period. By almost any measure, France is more creditworthy borrower eight months after losing their AAA rating with S&P. Price/yield action on French debt shows investors have determined the analysis done by ratings firms on the world’s largest nations to be irrelevant.