The ECB kept rates on hold yesterday and provided no real clues as to when it will start increasing rates again. The ECB kept its 1 year cash handout at 1% which was a hot topic as any change in rates would imply the next likely move from the ECB. However as rates remained unchanged this provided a pop up in the short end, as white month Euribors rallied, along with the schatz and the long end sold off.
Spreads across the curve increased making back ground after selling off before the meeting. Looking forward it looks like rates will be on hold for a while still as its is still too early to asses where we have fully recovered from the recession.
As far as trading is concerned, im looking to short the long end on new highs, but favour butterfly strategies more.
Stock have been hit hard of late but made a slight recovery as the selling pressure eases. However it doesn't look like it will last long as the volume to the upside is very low relative to the downside. It is likely we wont see any new yearly highs for stocks in my opinion, today's job number might be dissapointing after less then expected ADP number.
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