-Draghi spurred a sell off yesterday as he quashed hopes that the ECB would be more aggressive in terms of stimulus.  The ten year yield rose to 161.3, up nearly 8 bps, almost a complete reversal of Tuesday’s rally associated with weak Service ISM and Labor Mkt Conditions.  Euro$ calendar spreads firmed.  For example, red/gold pack spread rose 3.375 bps, however, it’s still below 43.

Bearish factors for fixed income include the surge in Crude Oil to a new high in the month of September.  CLV6 settled up 2.12 to 47.62 as inventory levels saw a substantial draw.  Additionally, US Treasury auctions of 3, 10 and 30 year paper occur in the beginning of next week, with both 3’s and 10′ s on Monday and 30 year bonds on Tuesday.  

–It’s worth noting that ESZ (mini SP) had an outside day and closed lower, though the range wasn’t particularly large.  The true change in trend will likely be a result of repudiation of central bank policies; Gundlach did his part in his quarterly review yesterday. News in the US is light today with Wholesale Inventories.  German trade data reported this morning, was weak.  From Reuters “German exports fell sharply in July, shrinking the overall trade surplus for the fourth consecutive month — something not seen since 1992…”