Here’s my take on the markets today, June 13, 2012. If you’d like to read more of my articles, click here.
Credit gauges are mixed today. The 3M EUR/USD Cross-Currency Basis Swap is rising +2.6% to -54.73 bps. The TED Spread is falling -1.3% to 37.66 bps. The 2Y Swap Spread is falling -2.6% to 30.18 bps. The European Financial Sector CDS Index is falling -.96% to 290.05 bps. The Germany sovereign cds is down -1.4% to 108.12 bps. The France sovereign cds is falling -2.3% to 211.75 bps. The Spain sovereign cds is down -1.3% to 599.25 bps. The Italy sovereign cds is down -2.3% to 551.0 bps. However, the 3M Euribor-OIS Spread is rising +1.5% to 37.65 bps. The FRA-OIS Spread is rising +2.2% to 40.35 bps. The Spain 10Y Yld is rising +5 bps to 6.75% and the Italy 10Y Yld is gaining +4 bps to 6.21%. The US sovereign cds is gaining +.8% to 49.94 bps and the North America Investment Grade CDS Index is rising +.73% to 124.25 bps. Credit continues to lag equities meaningfully and gauges remain at stressed levels.
Major Asian indices were mostly higher overnight, led by a +1.3% gain in China. Major European indices are mostly lower, led down by a -.65% decline in Italy. Italian shares are now down -4.0% in 5 days and down -14.5% ytd as they approach their June 1 lows, which is a big red flag. The Bloomberg European Bank/Financial Services Index is down -.04%. This Nigel Farage video is making the rounds today.
The Citi US Economic Surprise Index is falling another -5.2 points to -53.6, which is the lowest since early-September. The weekly MBA Home Purchase Applications Index jumped +12.8% this week, but remains trapped in the same range it has been in since May 2010. As well, Copper/Lumber/Oil still trade poorly and the 10Y trades too well.
(XLF) is picking up steam after the Dimon testimony. Considering the large reversal higher in the euro currency, today’s equity rally off the lows is of low quality so far. Volume is once again light and there are few big volume/gainers. Leadership is also lacking. I covered some of my index trading hedges this morning and I am positioned 75% net long.
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