Volatile Day

We had some good volatility today in euribors. The whole curve was pretty flat but after an initial sell of in the morning we rallied to highs then came off as equity markets made a strong start. Whether this rally in stocks is just a dead cat bounce remains to be seen.
The calendar spreads were very well behaved pretty much trading in line the whole day. The Mar10-Jun10 spreads moved from 17.5 in the morning to a low of 15s, but ranged well and was nothing to alarming.
We had good volume to with over 100,000 contracts trading in many of the front to red months.
Longer dated bonds sold off quite heavily relative to near end. With the bund down 70 ticks as I write and schatz down 10 ticks. Its a reversal of yesterdays trends where the front end of the curve sold of heavily relative to the back.
My bias is buy these calendars as we go lower, they have retraced quite a bit from its highs and personally I feel we still have a bit of a way to go.

Ecb member Webber said that rates can go to zero if the situation demanded it. Ive heard so much contradiction from these members that I have started to not pay any attention to them, I guess they are just trying to stir up some volatility.

Stocks still rising as I finish writing, Eurostoxx up over 5%, gaining traction from earlier citigroup comments.

Rajen