Morning 10-16

From Mike Zaccardi, CFA, CMT

 Below Austria’s 100-year bond take notice of the Red circle it is yielding.46% for 100 year! if you are Austria why wouldn’t borrow as much money as you can for the paltry rate

 This is a theme that is starting to become more prevalent. Gundlach in an interview with real Vision indicating that Bond Vol is basically zero and that Trading and or investing in treasuries offer little return and very little excitement.  From the Interview “if you were only a treasury market investor right NowThis situation is truly hopeless, hopeless. the yield is 50 bps the vol is zero. You have zero income and there’s no Volatility to trade to actually make something happen through price change”….”From IFR news “With rates low, the reason to invest in hedge funds, or allocate money to dealer desks will be a heated topic. How much extra return can a fixed income department at a hedge fund or money-center bank generate verse a buy and hold player with rates near the zero bound? These topics will be important in the low rate environment and unfortunately may lead to cutbacks in employment if the allocation of capital is deemed more sensible in another sphere.”  Uplifting News for bond traders

 Speaking of bonds Spanish 5 year yield all-time record low of .-.39  all EZ countries  besides Italy and Greece have 5 year yields that are negative, half of EZ countries 10 year yields are negative and three Germany, Netherlands, Finland have 30 year yields that are negative  not a surprise then that Austria’s positive .46% yield is in demand. Swiss 50-year bond trades with a negative yield

No changes in market theme today waiting for election, Stimulus News (trump says he will lean On senate republicans)  Virus cases increasing throughout U.S. and Europe and Brexit news. These are the factors driving the markets if news regarding these items is absent markets choppy with news, A Directional trade ensues, A resolution to the Biggest unknown obviously wont come for two  more weeks  Soybeans and Corn Both higher  Go figure but  Weekly corn export Numbers a bit light whereas Soy higher then expected

News:

  • Clorox and JnJ downgraded to neutral by JPM
  • President of EU council hopes progress in the Future for Brexit talks
  • Corn touched a 1-year high Overnight Soy steady besides china demand brazil may relax import tariffs on Both possibly crating a bit more Demand for U.S. products (pro farmer)
  • The Yuan Approaching multi -Month highs Chinas Moves early this week to stifle the buying appears to have failed
  • Retail sales  beat handily to the upside
  • Coke getting rid of tab by year end
  • Almost 20 million people have already voted shattering early voting records
  • Pfizer may be ready to apply for emergency -use authorization for its vaccine by late Nov_BBG

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