Tuesday, June 10, 2008

Rates up worldwide

Walking into work this morning I was greeted by alot of red numbers on my screens. These numbers were not my P/L (for a change) but rather the prints off interest rate futures screens that I watch daily. All interest rate futures that I watch were down on the day. Short Sterling (England) were down over 40bp as were Euribors (Europe). In the U.S., by the end of the day similar prints were taking place. As many readers know this is something I have been looking for. The markets finally started moving my way. I think alot had to do with Trichet's comments last week about actions speaking louder then words (He did retrace those comments a little by saying that no rate rises are guaranteed). But I think one thing is clear, rates are no longer going lower. Inflation is the worlds biggest concern Barack Obama has Paul Volker as his economic advisor. For those to young to remember, Mr Volker was the Fed Chairman during the early 80's when inflation (and high gas prices)were a huge problem. He moved rates considerable higher and is credited with getting inflation from 13.5% in 1981 to 3.2% in 1983. Quite an achievement. On a side note I think this add's tremendous creditability to Obama's campaign.

On the rumour mill was a report that Bernanke was going to make it quite clear that the next move in rates was up and in very short order. The trade everyone was looking at was the 2-5 year note's that were looked at as quite expensive if this turns out to be true.



Anonymous Anonymous said...

Bernanke threw the cat amongst the pigeons last night, BoC meant to cut this AM...will be interesting to see if they do - USD/CAD much higher because of B;s comments...no change will pop CAD higher (USD lower)

8:37 AM  
Blogger Banker said...

I saw that today and was pleasently surprised to see the non movement in the Canadian rate. I agree the Canadian dollar should do better but I think being long Cad ag Gbp or Eur will offer more upside.


5:50 PM  

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