Today marks the end of not only Monthly Options Expiry, but also Quarterly Stock Equity Futures Expiry as well, technically Equity Futures expired yesterday.
Next week will be a very volatile week as fresh new supply ($104Billion) of Treasury Issuance is released. Yields have been pressured to the upside for many reasons, and it will be interesting to see how the bond junkies soak up the new supply.
We may very well see the trend of sell bonds to buy equity trade next week, but beware, sooner or later the back up in long term treasury yields will hit equity land.
Also of note, after options/futures expiration, traders generally revalue and re leverage capital and positions.
Again pay close attention to Bond Yields, this is the single most important metric we can use to judge the state of the economy/credit system. There are rumors that BBA LIBOR, which is in the process of adding more dealers to gauge/set rates will be on the rise, which is good for no one.
Also, the recent back up in Treasury Rates has an ugly 1987 like feel to it. You know what happened then.
I see more of what we have been seeing..slow grind higher as volatility gets stripped out of the mkt.
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