ber 26Sun d a y, Oc tober 27ay, October 26 Sunday, October 27
ber 26Sun d a y, Date and Time 10/09/2013 06:00 10/09/2013 09:00 10/09/2013 09:00 10/09/2013 13:00 10/10/2013 07:30 10/10/2013 07:30 10/10/2013 10/16 10/11/2013 07:30 10/11/2013 07:30
Oc
Event MBA Mortgage Applications Wholesale Inventories MoM Wholesale Trade Sales MoM Fed Minutes from Sept 17-18th Initial Jobless Claims Continuing Claims Monthly Budget Statement PPI YoY PPI Ex Food and Energy YoY
Period 4-Oct Aug Aug
Prior -0.40% 0.10% 0.10%
4-Oct 27-Sep Sep Sep Sep
---1.40% 1.10%
•
History Lesson: The shutdown has furloughed nearly 800,000 government workers and the impact is an estimated loss of $300 million a day to GDP -- more if you include government contractors. As we near the Treasury’s deadline of October 17th, the odds are even better that the pending budget debate will be bundled into the debt ceiling debate. Once again, history repeats itself. The debt ceiling stalemate of August 2011 led to a US credit rating downgrade by S&P and caused the S&P 500 Index to drop 11% in three days. Accordingly, this week we witnessed the CBOE VIX volatility index creep upwards; implying another painful lesson is on the horizon.
tober 27ay, October 26 Sunday, October 27
Libor Last Price Five day change Libor 1M 0.1733 -0.00635 Libor 2M 0.213 -0.0035 Libor 3M 0.24285 -0.0055 Cash Markets Fed Funds 0.09 0 TSY Repo O/N 0.06 0.03 Money Markets USD Swap 2 YR 0.461 -0.009 USD Swap 5 YR 1.5675 -0.0105 USD Swap 10 YR 2.8115 0.0054 Volatility Vix Index 16.74 3.61 Commodities Copper Futures 330.45 -5.9 Gold Futures 1308.7 -22.5 WTI Crude Futures 103.67 0.84 Natural Gas Futures 3.512 -0.085 CRB Index 466.86 -3.71 Equity Indices SPX Futures 1684.8 -1.9 Dow Jones Futures 15005 190 Rig Counts Baker Hughes Gas Count 378 -10 Baker Hughes Crude Count 1372 -7 Baker Hughes Oil & Gas 1756 -17 Swap Spread Rates USD Swap Spread 2 YR 13 0.25 USD Swap Spread 5 YR 16 1.19 US Treasuries US 10 YR Treasury 2.6484 0.0002 US 30 YR Treasury 3.7268 0.0325
Ken Hogan SVP, Head of FX
Nader Adeeb VP, FX Trading
Bloomberg FXET: CADB SWIFT: CDBKUS44 [email protected] + 713-871-4061 www.cadencebank.com
•
Transcanada Corp: While the US budget and debt drama implies horrific slowdowns in industrial production and energy use, it is actually helping our friends north of the border. This week, US Treasury prices popped and yields plummeted, making it a great time for TCN to sell $1.25 billion of bonds. Funds from the bond sale will be used to finish construction on Keystone Xl project’s southern section. News of an October completion supported the crude market as everyone expected further delays. With an initial capacity of 700,000 barrels per day, the Gulf Coast pipeline from Cushing, Oklahoma to Nederland, Texas will allow WTI to flow freely.
•
Nash Equilibrium: The stalemate in DC over the federal budget and debt ceiling has led to fears of a US Default. Although the markets have discounted this notion, the US Treasury went so far as to warn that in the event of a default, credit markets would freeze, interest rates would skyrocket, and the USD would plummet. As a result, market-makers are employing game theory strategies employed during the Cold War in order to predict possible scenarios and the chances of reason prevailing. However, a JPM strategist summed it up best by saying, “Predicting the illogical path taken by illogical politicians is completely illogical.” A zero sum game?
•
Cost of a Buck: This week’s government shutdown drama made for a relatively cheap US Dollar and pushed the US Dollar Index down to its weakest level in eight months, re-testing levels last seen in February. It also pushed gold to its largest daily gain in weeks as gold is a common disaster insurance vehicle. Not surprisingly, in the first three days of shutdown, treasury prices popped and US Dollar swap spreads rose as buyers sought the safety of government securities. The Euro has been the main beneficiary of this turmoil and has even been called an “island of stability.” However, the Euro’s gains could be short-lived as a resolution transpires.
Oc
Event MBA Mortgage Applications Wholesale Inventories MoM Wholesale Trade Sales MoM Fed Minutes from Sept 17-18th Initial Jobless Claims Continuing Claims Monthly Budget Statement PPI YoY PPI Ex Food and Energy YoY
Period 4-Oct Aug Aug
Prior -0.40% 0.10% 0.10%
4-Oct 27-Sep Sep Sep Sep
---1.40% 1.10%
•
History Lesson: The shutdown has furloughed nearly 800,000 government workers and the impact is an estimated loss of $300 million a day to GDP -- more if you include government contractors. As we near the Treasury’s deadline of October 17th, the odds are even better that the pending budget debate will be bundled into the debt ceiling debate. Once again, history repeats itself. The debt ceiling stalemate of August 2011 led to a US credit rating downgrade by S&P and caused the S&P 500 Index to drop 11% in three days. Accordingly, this week we witnessed the CBOE VIX volatility index creep upwards; implying another painful lesson is on the horizon.
tober 27ay, October 26 Sunday, October 27
Libor Last Price Five day change Libor 1M 0.1733 -0.00635 Libor 2M 0.213 -0.0035 Libor 3M 0.24285 -0.0055 Cash Markets Fed Funds 0.09 0 TSY Repo O/N 0.06 0.03 Money Markets USD Swap 2 YR 0.461 -0.009 USD Swap 5 YR 1.5675 -0.0105 USD Swap 10 YR 2.8115 0.0054 Volatility Vix Index 16.74 3.61 Commodities Copper Futures 330.45 -5.9 Gold Futures 1308.7 -22.5 WTI Crude Futures 103.67 0.84 Natural Gas Futures 3.512 -0.085 CRB Index 466.86 -3.71 Equity Indices SPX Futures 1684.8 -1.9 Dow Jones Futures 15005 190 Rig Counts Baker Hughes Gas Count 378 -10 Baker Hughes Crude Count 1372 -7 Baker Hughes Oil & Gas 1756 -17 Swap Spread Rates USD Swap Spread 2 YR 13 0.25 USD Swap Spread 5 YR 16 1.19 US Treasuries US 10 YR Treasury 2.6484 0.0002 US 30 YR Treasury 3.7268 0.0325
Ken Hogan SVP, Head of FX
Nader Adeeb VP, FX Trading
Bloomberg FXET: CADB SWIFT: CDBKUS44 [email protected] + 713-871-4061 www.cadencebank.com
•
Transcanada Corp: While the US budget and debt drama implies horrific slowdowns in industrial production and energy use, it is actually helping our friends north of the border. This week, US Treasury prices popped and yields plummeted, making it a great time for TCN to sell $1.25 billion of bonds. Funds from the bond sale will be used to finish construction on Keystone Xl project’s southern section. News of an October completion supported the crude market as everyone expected further delays. With an initial capacity of 700,000 barrels per day, the Gulf Coast pipeline from Cushing, Oklahoma to Nederland, Texas will allow WTI to flow freely.
•
Nash Equilibrium: The stalemate in DC over the federal budget and debt ceiling has led to fears of a US Default. Although the markets have discounted this notion, the US Treasury went so far as to warn that in the event of a default, credit markets would freeze, interest rates would skyrocket, and the USD would plummet. As a result, market-makers are employing game theory strategies employed during the Cold War in order to predict possible scenarios and the chances of reason prevailing. However, a JPM strategist summed it up best by saying, “Predicting the illogical path taken by illogical politicians is completely illogical.” A zero sum game?
•
Cost of a Buck: This week’s government shutdown drama made for a relatively cheap US Dollar and pushed the US Dollar Index down to its weakest level in eight months, re-testing levels last seen in February. It also pushed gold to its largest daily gain in weeks as gold is a common disaster insurance vehicle. Not surprisingly, in the first three days of shutdown, treasury prices popped and US Dollar swap spreads rose as buyers sought the safety of government securities. The Euro has been the main beneficiary of this turmoil and has even been called an “island of stability.” However, the Euro’s gains could be short-lived as a resolution transpires.
