Recession over..?

Well the good news is with UBS posting $11.9billion loss in the first quarter the sub prime problems are behind us and the recession is but a distant memory. I Should have known from the amount of bearish rhetoric I read this morning that the stocks were going to have some seriously large gains. I always get a wonderful sense of understanding when I watch the Bund rally after a higher CPI figure and rally after a stronger Chicago figure, just because the stocks are a bit under pressure. Needless to say the large gains to the upside of the equities lead to a big sell off in the bond markets. The Doji in the UST's were indeed a good call and the Bund did make a flirt with the 4% yield. Amazingly I didnt manage to translate this into any profit. I have decided to try not to discuss my trading in my blog so there shall be no more mention of that, just my thoughts, moans and groans on the markets.
One interesting snippet that Bloomberg decided not to cover in the ISM breakdown was that prices paid was up to 83.5 +8%!! and increasing at a faster rate (as was the case in the chicago figure). Inflation what inflation I hear them cry? did you see the US CPI last month, benign was an understatement. Well I sure cant wait for this months release because the clues are that it will be a stinker.
At 16:00 the yields were as follows Euro (2,5,10) 3.51, 3.67, 3.98 and US at 1.77, 2.64, 3.56. the euro was at 1.5595 and against stg 0.7894 as the dollar staged a broad based rally. I would assume from the charts that the Equities are looking very constructive for a continued short term move higher and conversely the fixed income will be pressured. I still think that 4% will prove a big barrier for the Bund and think we will see the US/euro spread narrow some more as it tightened by 6bps today.
The calender tomorrow offers up Eurozone PPI, US Factory Orders and Bernanke testimony at 14:30.

Good bye March...

What a dull day in the Bund today, when I left the office it had only done 772k lots by 16:00gmt, which is very low for that time of day. I found the price action not to my liking for most of the day and was very surprised to see that the strong Chicago pmi soon got shrugged off. Even the employment, new orders and the prices paid were all higher. Today was very much a stocks watch day with every down tick in the Dow being met with support in the Bund. Tomorrow I will be focusing on the UK manufacturing pmi at 9:30 then it will probably be time to catch up on all the blogs and weekly research until 15:00gmt. All eyes will firmly be on the ISM manufacturing figure to see if it follows the Chicago's uptick.
I get the impression that the Bund is finding support down at these price (115.85) levels and 3.94% ish seemed to hold in long before the euro started probing new highs against the dollar and sterling. Its unusual to see such a big gap on the Bund chart and I think we will probably take a look and visit it soon unless the ECB's rhetoric becomes more hawkish.
At 16:00 the yields were euro (2,5,10) 3.42%, 3.59%, 3.89%
US (2,5,10) 1.62%, 2.45%, 3.41%
Euro was 1.5847 and to stg 0.7972.

The low 5 year yield i quoted yesterday was for the German 5 year and not the eurozone 5 year. I have no idea why the two are so wide and cant help but feel these are erroneous quotes as Reuters still have German 5 years at 2.74% (DE5YT=RR) answers on a postcard please

Last Trading day of March

Last day of the month tomorrow so will need to keep an eye out for any duration buying. We have a few figures out tomorrow to get our teeth into. These include (times in BST):

9:00 Euro Zone m3
10:00 Eurozone Flash CPI estimate
14:45 Chicago NAPM

There are a few other odds and ends out but I will be focusing on these numbers. I will be paying close attention to the loans to private sector of the M3 release to see if the squeeze in the euro libor rate has started to have more of an effect. Obviously the CPI flash will be closely watched but the surprise will be more so if the figure should come in lower as the ECB as already tee'd the market up for the CPI ticking up in the short run. It seems from watching the equities that people are beginning to look beyond the recession in the states. It wouldn't surprise me if the spin on a low Chicago number is that its a low point and we pick up from here. Either way the employment component will be watched for clues with Fridays NFPR.
Euro Yields at close on Friday were (2,5,10) 3.49%, 2.88%, 3.94%
US Yields at close (2,5,10) 1.64%, 2.49%, 3.44%

I am not sure why the Eurozone 5 year is so low but it doesn't look right to me and I feel it should be much higher.