ECONOMIC DATA 02/09/2009: all times EST. 10:00 AM U.S. WHOLESALE TRADE. 1:00 PM U.S. 3 YEAR AUCTION ($30 BIL, PREV B/C (2.21)
TREASURIES MOVE IN CHOPPY SESSION. 30 YEAR FUTURES FALL THROUGH SUPPORT BEFORE RALYING BACK TO UNCHANGED AS MARKETS AWAIT STIMULUS PACKAGE, AUCTION RESULTS
U.S. Treasuries traded in a choppy, narrow range as the majority of futures markets traded in one of the most range bound Monday’s of recent memory. The long end of the Treasury yield curve is being especially pressured by the “wait and see mentality” as the markets are contending not only with the release of the newly revised, supposedly scaled down U.S. stimulus package, but also the results of record auctions of 3, 10, and 30-year U.S. debt. With demand for short term U.S. remaining high, as shown by the relatively high bid to cover ratios of Monday’s 3- and 6-month bill auctions, longer term debt continues to struggle somewhat in its ability to find buyers with the same high demand.
Tomorrow’s auction of nearly $30 billion of U.S. 3-year notes represents the largest portion of the record amount scheduled to be offered this week. This auction will be especially important as an indicator of future price direction for Treasuries due to the fact that many Treasury and Fed watchers seem to perceive the U.S. 3-year note as the bellwether for measuring the peak to trough of the life expectancy of the current fiscal and economic crisis and recovery period. The success of this auction should offer an indication of how successful the market believes the current means of fiscal employment by the U.S. government will be in revamping the economic and business landscape for the next decade.
Technically, March 30-year futures made their second attempt to pierce the key support level at 125.12, with a break of this level opening up a test of 123.210. While market trade significantly under that level for a good part of the session, short covering near the close set up a strong defense of the level. Market support has pulled back slightly to 125.03. Initial resistance forms on the contract at 127.10, with additional resistance at 128.05.
U.S. DEBT FUTURES
OPEN
HIGH
LOW
CLOSE
CHANGE
U.S. H9 (U.S. 30 YRS)
125.260
126.070
124.315
125.215
-5.5/32nds
TY H9 (U.S. 10 YRS)
121.260
122.010
121.095
121.180
-8.5/32nds
Rich Roscelli and 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. Alaron Trading Corp. its officers and directors may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.
