In Between Days: Greece, Gold and Jackson Hole

by CC August 24, 2011 6:02 pm • Commentary


Tomorrow’s Economics:

  • 8:30 a.m. ET: Weekly jobless claims are due from the Labor Department. They’ve been hanging around 400,000 for forever, which is better than getting worse. Economists are going ahead and assuming they’ll keep hanging around that mark.
  • 1:00 p.m.: Treasury auctions off some 7-year notes.


Fed Chairman Ben Bernanke is unlikely to use his speech Friday at the Federal Reserve’s annual Jackson Hole, Wyo., conclave to unveil new efforts to bolster the U.S. economy—despite financial markets’ lingering hopes that he will.

As the economic outlook for the U.S. and Europe deteriorates, stock markets have been gyrating and Fed watchers around the world speculating that Mr. Bernanke is about to ride to the rescue.

The Fed chief preaches and practices transparency. Neither Mr. Bernanke nor officials close to him have said anything to encourage the speculation that he will succumb to pressure from markets …


While the world seems divided on whether Friday’s Jackson Hole meeting will result in the announcement of a fresh round of quantitative easing or not — we thought we’d run with the premise that QE in its conventional form is now redundant or impossible.

(For why we think this, see here and here.)

So what, if any, are the possible alternatives?

Here are some we’ve seen thrown about recently:

Read them here

Calculated Risk

The Greek bailout deal is under pressure … and the Greek 2 year yield increased to 44% and the 10 year yield increased to 18% this morning.


The two-year swap spread, the main gauge of credit risk, has tightened by 3.5 basis points recently to 29.25 basis points. The spread jumped to 32.75 basis points Tuesday — the highest since July 2010.

The VIX, meanwhile, is down 3% to a little more than 35, the lowest in a week.

Ten-year Treasury yields have jumped to 2.29%, their highest since Aug. 15.

And gold prices today suffered their biggest one-day percentage drop since March 2008, plunging more than $100 an ounce to well below $1800.


CME Group Inc. raised the margin requirements on gold trading at its Comex unit for the second time this month, after prices surged to a record above $1,900 an ounce before plunging today by the most since March 2008.

The minimum cash deposit for borrowing from brokers to trade gold futures will rise 27 percent to $9,450 per 100-ounce contract in the speculative Tier 1 category at the close of trading tomorrow, Chicago-based CME said in a statement. On Aug. 11, the increase by the exchange was 22 percent to $7,425. The cost of one contract after today’s close was $175,730. The maintenance margin will rise to $7,000 from $5,500.

Comex is making it more expensive for speculators to trade the metal as open interest for gold options climbed to a record 1.263 million contracts on Aug. 18 and prices slumped more than 7 percent in two days, erasing the gain of the past two weeks that sent the metal to a record $1,917.90 yesterday.