Aug 23. Copper–> rates higher. Grains–> rates lower
–Quiet session yesterday as stocks rebounded. Ten year yield rose 3.3 to 221.3. In euro$ options there were a couple of trades which modestly favor a steeper curve/widening calendar spreads in the context of an idle Fed. +20k EDH8 9862/9875cs to sell the same in EDM8 for flat premium. March call spread settled 2.0 and June at 2.5; EDH8/M8 settled 5.5. Also a buyer of EDZ7 9862c vs 2EZ 9850c for 0.5; another play for Fed paralysis. EDZ7 call settled 3.25 with 38 delta and 2EZ 3.0 with 15 delta.
–I’ll bet Mnuchin’s glad he ignored his classmates as Trump threatened to shut down the government over the border wall. The threat of a shutdown over the debt ceiling limit is growing.
–While copper surged to a new high above 3.00 before pulling back, December Corn and Wheat both closed at new lows for the year, having suffered huge sell offs from the early July spike.
–Sept treasury options expire Friday, coinciding with Yellen’s Jackson Hole address. Treasury futures roll activity picking up, with TYU/Z settling 9.5. TYZ open interest now up to 300k vs 3.1m in TYU.
