Wednesday, June 3, 2015


There is really nothing else to say.  OK numbers in the U.S. and Sr. Draghi commenting this morning that inflation was up slightly, his QE was going to continue and that he hoped a resolution of the Greek situation would occur, produced an overall belief that things were indeed looking up and it was now time to seek returns rather than merely hope for a return of principal.  Everybody sold bonds, driving the ten year Bund to 0.888% and the ten year Note to 2.36%--a level that had not been seen since last year.  The range that seemed to be 2.10-2.25% blew up early.  2.25% is still a support level but on the down side this time.  Mind you, what has been going on, especially in the Bund, is remarkable, but there is still an tremendous influence due to the lack of liquidity in this market.  Nevertheless, there has been a clear change of mood over the past two days and people who held their  long positions were, as we have said, very wrong.  A lot of money has been lost.

We have the jobs number on Friday and the talk on the street is that it will be a good one.  Good is a relative term but in these kinds of markets, relativity and  perception are a hell of a lot more important than reality, so it might be a good idea to keep one's seat belt fastened.  If jobs don't pan out, and/if the Greek thing goes stalemate, this market can turn on a dime in an even more violent manner.

And speaking of the Greeks, Tsapris headed off to Brussels today with his political guys, recognizing that we are probably at the conclusion of the financial negotiations and the next step will be for the pols on both sides to swallow hard and get something signed up.  It will be a nonsense of course as the Greeks really have no way to fulfill anything that the lads can dream up in an economic sense, but the can will proceed down the road in the hope that six months from now there will be the light of a new day.  Not exactly an honest perception but perhaps not such a bad one either.  As the purchaser of a lottery ticket would say, "Hey, you never know."  And perceptions count.

I have the feeling that we are at a bit of a crossroads with the events of the next few days looming larger in importance.  I'm surprised but not displeased.  I hope things break right but I'm still not sure. I must say I wouldn't mind becoming optimistic for a change but then again...Anyway, we stand watch.


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