Economic data 01/16/20098:30 AM U.S. consumer price index (-0.9%), ex food energy (+0.1%)9:15 AM U.S. industrial production (76.0%) 10:00 AM, U.S. consumer sentiment (59.0)
Treasuries trade in narrow range; caught between economic and supply woes
U.S. Treasuries spent Thursday’s session in a range bound session, caught between demand driven flight to quality and concerns regarding the viability of the enormous levels of supply which the government will have to float in order to finance current and future stimulus plans. A proposed package of $885 billion in stimulus managed to offset gains achieved during the flight to quality dash which occurred as equities traded to support levels which could set up to retest the lows of November 2008.
Economic data released today on PPI, manufacturing, and general business conditions all came in slightly higher than expected. The data release sent Treasuries to their lowest levels of the session. The markets rallied back as equities came under pressure from increasing economic worries, particularly in the financial and technology sectors. As the markets determined equities had reached oversold conditions, a rally came in stocks, pulling money away from secure debt as supply concerns reentered the market, fueled by a proposed $885 billion Congressional stimulus plan. Supply and demand forces countered each other in Treasuries, allowing the markets by the end of the session to close slightly higher. Treasuries are likely to take cues from release of CPI data on Friday, as well as the release of what could be the final earnings release of Citigroup under the “financial supermarket” structure, which appears to have collapsed under its own weight and density.
Technically, U.S. 30 years appear to be topping out near the 137.10 resistance level, settling into a channel that should initial support at 136.00, with a strong level setting in at 135.21.
US DEBT FUTURES
OPEN
HIGH
LOW
CLOSE
CHANGE
US H9 (US 30 YRS)
137.080
137.135
136.160
137.045
+8.5/32nds
TY H9 (US 10 YRS)
127.010
127.100
126.240
127.005
+1.5/32nds
Rich Roscelli and Paul Brittain
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