Monday, September 18, 2006
Well, the IMF reclaimed the mantle of irrelevancy that it has proudly borne for sixty years, as little of substance emerged from the weekend’s meetings in Singapore. Sure, China saw its quota bumped and the G7 agreed that greater yuan ‘flexibility’ sure would be swell. But other than a few token sideline whinges about EURJPY, there was relatively little to interest Macro Man, or anyone else for that matter.
Unless the G7 are prepared to take China, Russia, and the Middle East to task for their obliteration of free floating G7 exchange rates, there is little other than exporters or a position unwind standing in the way of a weaker yen. At the moment, neither appears to be particularly potent obstacles. As a result, Macro Man will sell out his 149 EURJPY puts purchased on Friday, recouping 37 pips. An 18k loss is not difficult to take on what was after all a lottery ticket bet on a G7 surprise.
Elsewhere, US Treasuries are refreshingly limp, perhaps spurred by CFTC reports of yet another record long in 10yr futures. Macro Man remains a stop loss seller through 106-24. Although the Fed meets on Wednesday, the key for Treasuries this week is probably the housing data- NAHB tonight, with starts released tomorrow. In this vein, it is interesting to note that the homebuilders’ stock prices have ceased their sickening plummet and seem to be putting in a base, for example Toll Brothers as seen below. Given that the implosion of US housing has now gone tabloid, the chances are rising of an unexpected sign of improvement, if not this month than perhaps next.