Morning Call 6/17/2010

Stone Street Advisors

ChiBondKing laszlochi@gmail.com

Morning Focus
Light news overnight from Asia and Europe, the highlight of the evening appears to be the smooth Spanish bond auction which saw
10 and 30 year bonds successfully sold. Spain has been bucking the trend recently as the ECB weighs publishing Eurozone bank stress
test results Santander looks to be one of the stronger banks in the region that should come through this relatively unscathed. It
was a quiet day in the US bond market after a flurry of economic numbers early yesterday; however I expect the action to pick up
with CPI, Weekly Unemployment and Phila. Fed numbers. Weekly unemployment is expected to remain flat vs. the previous weeks
number. Asia ended mostly down overnight with the exception of HK which was up 0.38pct to 20138.40. Australia ended lower by
0.70pct to 4527, Nikkei down 0.67pct to 9999.40 and China (welcome back from the holiday guys!) ended down 0.38pct to 2560.25.
Ed Note: There will be an abbreviated Morning Call on Friday, June 18 as I will be in meetings; my sincere apologies for any
inconvenience.

Notable Overnight Headlines

Asia
Japan to lure foreign firms with tax breaks (Reuters)
China c.bank 1-yr, 3-yr bill yields flat at auction (Reuters)
Japan April Leading Index 101.7 Vs. 101.9 Last Month
Philippines March Wholesale Prices Up 9.5% On Year (DJ)
Hong Kong April Merchandise Exports Rise 16.7% On Year, Imports +21.5%

Europe
UKs FSA to be disbanded
Hungary government has decided not to draw down available tranches of IMF loan for now PM Chief Adviser (Reuters)
UK May retail sales +0.6 pct (Reuters)
Spain may use 30 bln eur for bank restructure: minister (Reuters)
Britain's FSA says firms still taking risky decisions (Reuters)
Greece Q1 Unemployment Rate At 11.7%
Spain successfully sells 10-, 30-year bonds (MarketWatch)
Swiss Industrial Production declines 7.8pct vs. -6.3pct consensus

US Pre Open
Economic News

Fed probing ties between bank for risks: Bernanke (MarketWatch)

Weekly Unemployment claims expected to be flat according to market participants (SSA Survey)

Equities

AIG - U.S. SEC said to end probe of AIG and executives (Reuters)
WFC - Wells Fargo sees lower-end US home market recovery (Reuters)
FNM/FRE So Long: FHFA insists that the two delist from the NYSE and any other regional exchange

Interesting Morning Reading

Professor Pinch: Clean Up On Aisle 6!! Thats The LIBOR Aisle: http://professorpinch.wordpress.com/2010/06/16/clean-
up-on-aisle-6-thats-the-libor-aisle/
Eli Radke: When To Press It: http://mytradingnet.com/blog/2010/06/16/when-press-my-story/

See Important Disclosures on page 5

 Joe Weisenthal: The Real Story Of How Jamie Dimon and Barack Obama Stopped Being Friends:
http://www.businessinsider.com/the-real-story-of-how-jamie-dimon-and-barack-obama-stopped-being-friends-2010-6
Asia Imposes Curbs to Slow Expanding Property Bubbles (Bloomberg):
http://www.bloomberg.com/apps/news?pid=20601010&sid=aCIVlDWiHRA8

Notable Bond Market/Economic Events

Bond Auctions (1PM ET)
o None
Upcoming Bond Auctions (This Week)
o None
Economic Releases For Today
o 8:30AM
Core CPI, cons. +0.1pct
CPI, cons. -0.2pct
Unemployment Claims, cons. 452K
Current Account, cons. -120bn
o 10:00AM
Philadelphia Fed Manufacturing, cons. 21.1
Conference Board Leading Index, cons. +0.4pct
o 10:30AM Nat Gas Storage, cons. 86B
o 7:50PM Japan Central Bank Monetary Policy Meeting Minutes

See Important Disclosures on page 5

Market Summary 7AM

Futures Currencies Fixed Income

Symbol Last Chg Symbol Last Chg Symbol Last Symbol Last
DOW 10373 29 EURUSD 1.2372 0.0063 2s5s 132.00 US2Y .73
SP500 1112.5 3 GBPUSD 1.4796 0.0068 2s10s 254.00 US5Y 2.05
NSDQ 1910.25 4.25 EURJPY 113.01 0.44 2s30s 346.00 US7Y 2.73
ZB 123'06 +0'02 USDCAD 1.0257 0.0011 5s10s 122.00 US10Y 3.27
ZN 120'025 +0'005 USDJPY 91.29 -0.22 5s30s 214.00 US30Y 4.19
ZF 116'315 +0'015 NZDUSD 0.7003 0.0035 10s30s 92.00 UK5Y 2.25
ZT 109'040 +0'005 UK10Y 3.52
CLN0 77.25 -0.42 UK30Y 4.3

See Important Disclosures on page 5

 Morning Call 6/17/2010
Stone Street Advisors
ChiBondKing laszlochi@gmail.com

Chart Of The Day

A comparison of risk across the curve: January 2010 to June 15, 2010

See Important Disclosures on page 5

 Morning Call 6/17/2010
Stone Street Advisors
ChiBondKing laszlochi@gmail.com

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