Business

First thing this morning, when previewing the key event of the day, namely today's auction of $29 billion in 7 Year Treasurys, we said that "with the issue not anywhere close to trading "special" in repo, the risk for a big tail - like in yesterday's 5Y auction - is high."

Specifically, we were looking at the 0.45% repo rate on the 7 Year yesterday and today, which was the highest across the entire curve, suggesting absolutely no short covering would take place into today's auction.

A little over a week ago, Portugal announced that for the second time in less than two years, Lisbon would be forced to bailout a large lender. 

This time around it was Banif, the country’s seventh-largest banking group which ran into trouble when it couldn’t repay a previous government cash injection (so really, this was a bailout of a bailout). 

If at first you don't succeed, try, try, keep trying again and again.

That appears to be the mantra of Goldman's credit strategists, who one year ago when the 10Y was trading right around current levels, predicted that the yield on the benchmark bond would rise to 3% by the end of 2015. It was just a little off.

First, here is Goldman's apology for being so wrong in what may be the most important forecast a bank makes (as it involves everything from the economy to the equity risk premium): where the 10 Year will trade:

Last night's surprisingly large inventory build reported by API (+2.9mm vs expectations of -2.5mm) sent hopeful crude prices reeling (not helped by comments from Iran and Saudi this morning). Following last week's huge 5.9mm draw, DOE reports a 2.63mm build (confirming API's data). Cushing (which API reported as a 923k build) also saw DOE report a 0.9mm barrel build (pushing closer to its limits). As we have detailed previously, December typically sees major drawdowns in inventory as energy firms attempt to minimize tax burdens into year-end.

Over the past six or so months, the OECD, the WTO, and the ADB have all come out with rather grim assessments of global growth and trade. 

Back in September for instance, the WTO warned that the rate of growth in global trade is set to trail the expansion of the worldwide economy for the third year running. As WSJ noted at the time, “before the recent slump, the last time trade growth underperformed the rate of an economic expansion was 1985.”