ECONOMIC DATA FOR JAN. 30, 2009:
8:30 AM-US 4THQ REAL GDP (-5.4%), US EMPLOYMENT COST INDEX (0.7%).
9:45 AM NAPM-CHICAGO (34.0).
9:55 AM US CONSUMER SENTIMENT (61.9)
TREASURIES CONTINUE PLUMMET, 30-YEAR PIERCES KEY TECHNICAL LEVELS ON WEAK AUCTION RESULTS FROM RECORD US FIVE-YEAR AUCTION.
U.S. Treasuries continue their fall, accelerating from Wednesday’s post FOMC doubt regarding if and when the Fed will purchase Treasuries to support lower rates, as disappointing results from a record $30 billion auction of U.S. five-year notes seemed to confirm that buyers of government debt are becoming less inclined to commit to historically low yielding, long term debt instruments. Concerns regarding inflation and potentially missed opportunities for higher yielding corporate debt (a large amount of quality debt yielding nearly twice as much as 30-year futures is scheduled for auction next week). Higher Yielding corporate and municipal debt appears to be finding more interest, particularly as direct government stimulus to revenue producing entities could offer more support to economic growth and place some footing under corporate debt which appears to be at historically attractive prices.
Treasuries received some initial support this morning after economic data on durable goods, jobless claims, and new home sales provided a worse than expected outlook for future earnings and economic prospects. The support did not last as the market broke through key support levels in the 30 & 10-year futures, Treasuries became more vulnerable to downward momentum. The results of the five-year auction provided the final catalyst needed for the markets to break through to another level of key support. Movements in Treasuries for the near term will continue to be guided by concerns regarding economic outlooks and supply issues, in particular the results of auctions for benchmark three and 10-year note auctions and employment figures next week.
Technically, March 30-year futures have broken through significant support levels, gathering downward momentum that allowed for a push through the 127.00 handle. The market appears to be teetering at an oversold level which could result in a retracement to 127.20 in the short term. A push through this resistance level could see a retest to 128.02. Further downward momentum should allow for strong support at 125.04.
US DEBT FUTURES
OPEN
HIGH
LOW
CLOSE
CHANGE
US H9 (US 30 YRS)
128.300
128.300
127.040
127.045
-1 25/32nds
TY H9 (US 10 YRS)
123.185
123.290
122.255
122.265
-1 005/32nds
Prepared by Rich Roscelli & Paul Brittain.
Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities.
