Open interest fell as Eurodollar and Treasury prices advanced yesterday, indicating that as market participants take in both Yellen’s testimony and the spate of less than stellar economic reports, bearish minded traders are exiting positions.
On initial review, there is little to like in the Housing Starts and Permits, though the revision of last MoM was significant -1.9% to 0.0. Otherwise, the PPI data was weaker than expected across categories.
Eurodollar futures are lower today with the yield curve steepening throughout the first three years. The technical conditions continue to deteriorate and the risk for a precipitous fall (though not likely today) has increased.