Euribor spreads are on somewhat of an upward march, Jun10-Sep10 spreads reached high of 32, Sep10 Dec10 has traded 34s! Given that this spreads was trading 30s a few days ago and I thought that was high. As traders take their bets at the of rate rises after this year has ended, I have shifted my focus to trading further down the curve as the general level of steepening is less aggressive. Pretty much all risk of the ECB tightening in the front months have been removed, as steeping continues and likely will carry on a bit further.
Looking forward to today we have very little in the way of data, so unlikely to be many fireworks today.
Stocks look mixed after rallying yesterday with stronger then expected manufacturing data from Philadelphia providing the stimulus. I still hold my DIA puts, with the view that we still will have more of a correction. The fact that we did not rally as much as maybe we would have a month ago implies there is not much upside left to this leg of the rally.
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