Daily Clueless Musings 2/24

Economic data were mixed today. The weekly report on Initial Jobless Claims is back to the cycle low. Job number continue to show unpredictable fluctuations, given the severe weather conditions in the recent weeks. The January reading of New Home Sales was well under the forecast at 284k units annualized, as the California’s (home buyer tax credit) party ends. The January reading of Durable Goods Orders is in line with expectation, but Orders ex-transportation are -3.6%, much lower than the 0.5% expected. Rail traffic continue to show strong gains year over year, which bodes well the new round of inventory building. Across the pond, Euro area Jan inflation printed 2.4% gain year over year. Expectation for rate hikes rose and Euro gained against US dollar. News from middle east over shadow the economic news. Oil, S&P and Eurodollar back futures traded with a very high correlation. As rumors about Qaddafi is either dead or flee to Zimbabwe circulates the market, oil broke 2 bucks and yield curve steepened. Spot volatility seems to be very cheap, especially given the expectations for BoE and ECB rate hike this year are high.