One Minute News Summary

US:  Futures lower in the early AM as the market anticipates weekly jobs data, pending home sales, and purchasing data.  Lower volumes continue to be the norm during the holiday week.  With little economic data on tap for Friday, the markets should continue to list after today’s numbers barring unforeseen macro news – the source of which is likely away from the US.
 
Europe:  Italy auctioned €3B in 3Y bonds (yield 3.25% v 2.86% prior, b/c 1.395x v 1.380 prior) and €3B in 10Y bonds (yield 4.80% v 4.43% prior, b/c 1.288x v 1.273x prior).  With the Italian curve moving out, weighted average interest costs as a percentage of GDP (based on current yields) would be approximately 4.5% versus only 3.81% less than two months ago.  Though coupon payments are a more accurate estimate of cash flows, the increase in yield burden cannot be ignored.  The Bank of Spain has issued warnings against aggressive deposit gathering tactics involving high interest rates.  Greek newspaper Kathimeri warning of NPL rise.
 
Asia:  Chinese Yuan at highest level since 2005 reval as Chinese PMI dropped to 54.4 from a prior 55.3.  Though firmly in expansion mode, the pace is slower as tightening measures take hold.    Japanese exporters trade down on JPY appreciation expectations.

via Brian Yelvington of Knight Capital

Comments

[bobert]

Any suggestions on how to play the short end of the US

interest rate curve? An ETF perhaps? I have used PST

and TBT for mid and long positions but am not able to

find something for the short end. I'm thinking that we will

resemble Italy some day with 3.5% for three year.

[snowball777]

Don't be SHY when you SHV (Barclay's iShares ETFs)...depending on how you want to play.

[bobert]

Thanks!