Quote of the Week: Going Nowhere Fast…
Zak Vora, July 5th, 2010
05/07/10
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Change since 02/07/10
Another glorious summer weekend took my mind to getting on a bike and hitting the road to make the most of the fine weather. The flaw in the flawless plan, the need to get the bikes serviced before I took on the joys of London traffic, (they’ve been shown no love since I brought them back from HK). I never thought it’d be that hard to simply get cycles serviced, (I’m sure I’m in the wrong business), and in despair I found myself taking them back to my folks place in order to take care of things near them. So instead of taking up space at my place they now clutter my parents, hopefully I’ll pull my finger out and get them fixed up before the snow returns.
Whilst I slowly contemplate returning my bikes to health the markets were holding their collective breath on Friday to see if the US economy was on the mend with the release of the Non-Farm Payrolls numbers. Despite all the distortions in the numbers the bottom line was that jobs were being created, just not at the desired pace to bring the economy back to life. The backdrop is a weak set of numbers from other various parts of the economy, the fear of contagion from Europe impacting sentiment in the US to a degree and the concern that a combination of monetary policy tightening in the likes of China, along with Eurozone-wide austerity measures will cause a global double-dip. So whilst the peddles of the US economy are being pushed along with job creation it’s just not enough to get over the hill ahead. There needs to be approximately 125-150k jobs being created just to keep the economy at standstill given the growing population, we just aren’t there yet; the consensus for the moment is that the economy is running out of puff. If my experience is anything to go by my suggestion would be to have a few more people working in cycle shops over there, but that might not quite be enough.
Whilst the markets vex about the prospect of a double-dip recession the Aussie market has taken it on the chin with concerns that China’s measures to slow down its own economy will have a direct impact. There is even talk in some quarters of rate cuts down the road as economic numbers fail to impress as the impact of several rate hikes in Oz begin to be hit home. Yet the economy nears full employment and inflation remains a risk. The RBA meets tomorrow and is likely to keep rates where they are. Given where futures are trading the risk is to the downside and I like the idea of selling AUD 3yr Bond futures at 95.52, (currently trading 95.50), with a stop at 95.59 and a take profit at 95.30 for 10k a basis point. I think that’s enough twittering for the time being.
Have a good day…
AUD 3yr Bond Future
Current Price 95.50
Go Short 95.52 for 10k a basis point
Stop Loss 95.59
Take Profit 95.30
This entry was posted
on Monday, July 5th, 2010 at 3:02 pm and is filed under Blog, Featured.
