Well who would have thought we would still have the legs to rally 2% across the indexes given the 10% rally we have had in a week, but guess what it happened. Buoyed by good earnbnings and good better then expected housing data we had a big global jump as the US market opened. However after hours a big miss on Microsoft earnings and a revenue miss by Amazon, are likely to halt a 12 day rally by the NASDAQ. But it wouldn't surprise me if we still rallied today such is the momentum in this market, and as I write futures are almost flat after being down over 0.5% earlier.
Bond wise Bunds are now trading mid 120s as risk appetite continues to grow.
Euribor spreads are selling off in the long end and rising in the short end as traders continue to bet on ECB rate increases. Its been tricky to play these spreads recently, but playing the middle of the curve, i.e dec10 to jun11 seems to be the most stable at the moment.
Short sterling spreads have traded new highs as strong retail sales numbers yesterday increased the odds of a rate rise soon by the BoE. Jun10 Sep10 Short sterling spreads have trade 55s, and sep10 Dec10 have trade 56s! Volume has been very strong this morning as traders adjust there positions ahead of the UK GDP report later today. For short sterling I continue to favour shorting new highs, as often there is a half tick available before it shoots higher.
Have a good weekend!
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