ECONOMIC DATA 02/26/2009: all times EST.
8:30 AM: US DURABLE GOODS (-2.5%), US WEEKLY JOBLESS CLAIMS (625 K).
10: 00 AM US NEW HOME SALES (330 K)
10:35AM EIA INVENTORY (NAT GAS)
RESULTS FROM 02/25/09
US EXISTING HOME SALES - (4.49 M VS. EXP 4.8 M), EIA INVENTORY REPORTS (+0.7 M CRUDE,-3.1 M RBOB. REFINERY UTILIZATION- 81.4%. US 5 YEAR NOTE AUCTION ($32 B, YIELD 1.985 %, B/C 2.21)
U.S. TREASURIES FALL DESPITE EQUITY VOLATILITY AS RESULTS OF FIVE-YEAR NOTE AUCTION OFFER HIGHER THAN EXPECTED YIELD.
U.S. Treasuries fell in Wednesday’s session, after the results of the government’s sale of $32 billion of five-year notes, the debt instruments considered to be on the long end of the recession /recovery curve, were sold with a higher than expected yield. The disappointing results renewed concerns regarding the record levels of debt supply expected to be offered to the marketplace in order to support the bailout and recovery programs that will hopefully restart the U.S. and global economies that are struggling with the worst economic downturn in several generations.
Treasury debt first came under scrutiny during the European session when it was announced that S&P had downgraded Ukraine’s government debt to a CCC- rating. As the session wore on and equities appeared to be holding above support levels, even after a dismal existing home sales report was released, traders and investors turned their focus from security to supply issues, resulting in a sell-off across the yield curve. Concerns regarding the results of Thursday’s auction of the reintroduced seven-year note also pressured Treasuries. It appears that trading futures for higher yield is a far different cry from actually moving the product to long term holders, who appear increasingly concerned with regards to longer term inflation and the opportunity costs involved in holding low yielding, taxable government income for extended periods of time.
Technically, March 30-year futures should fill in a gap left from the 126-26 level before being able to move down to retest the 125-02 level. A move below this level could set up for a move to the 123-01.
US DEBT FUTURES
OPEN
HIGH
LOW
CLOSE
CHANGE
US H9 (US 30 YRS)
127.290
128.040
126.060
126.100
-1 22/32nds
TY H9 (US 10 YRS)
122.245
122.290
121.200
121.200
-1 07/32nds
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.
