ECONOMIC DATA FOR 03/06/09
8:30 AM-US NONFARM PAYROLL (FEB -648,000)
US UNEMPLOYMENT RATE (7.9%)
AVG HOURLY EARNINGS (0.2%)
AVG WORKWEEK (33.3 HRS)
RESULTS FROM DATA 03/05/2009
8:30 AM-US WEEKLY JOBLESS CLAIMS (637 K VS. 650K), US NONFARM PRODUCTIVITY (-0.4% VS 1.5%), UNIT LABOR COSTS (5.7% VS. 3.4%) 10: 00 AM-US FACTORY ORDERS (-1.9% VS. -3.5%) 10:30 AM EIA INVENTORY REPORT (NAT GAS -102 BCF). US 3 YEAR NOTE ANNO ($34.0B), US 10 YEAR NOTE ANNO ($18.0B), US 30 YEAR BOND AUCTION ($11.0B).
U.S. TREASURIES STAGE HUGE RALLY AS EQUITIES FALL TO NEW MULTIYEAR LOWS, SPECUALTION ARISES THAT FEDERAL RESERVE MAY FOLLOW BANK OF ENGLAND PLAN TO PURCHASE DEBT.
U.S. Treasuries staged a strong rally today, with 30-year futures jumping more than three handles on speculation that the Treasury might mirror the announced plan by the Bank of England to buy debt instruments, both sovereign and corporate. This same course of action was proposed by Fed Chairman Bernanke back in December and resulted in Treasury futures reaching all time contract highs. Since that initial announcement, support for the plan appeared to wane, as the Fed and Treasury appeared to a more direct tactic of buying mortgage obligations. However with the housing crisis seemingly incapable of finding a bottom in this relatively slow period of the year for real estate, it is conceivable that these government bodies may be seeking to implement a preemptive strategy to coordinate the lowering of borrowing costs with legislation designed to over tax breaks to homebuyers.
Treasuries also received a flight to security bid, as further concerns regarding global financial institutions and the expectation that General Motors is facing one of two outcomes: returning to the government for additional bailout funds or facing Chapter 11 bankruptcy renewed the overall negative sentiment on equities. Friday will reveal what is expected to be another dismal employment number. Expectations are for a loss of -650,000 jobs. If the number is significantly over -700,000, traders should expect extremely volatility in Treasuries-as the debate of security vs. supply will likely play out dramatically after the release. This should result in volatile swings in prices, particularly on the long end of the yield curve.
Technically, June 30-year futures broke out of the channel set back in mid February. While the market may have to fill in gap back to 126-03, this could be a setup for an additional upward move to 127-25. New level of support has set at 124-25.
US DEBT FUTURES
OPEN
HIGH
LOW
CLOSE
CHANGE
US M9 (US 30 YRS)
123.315
127.170
123.205
126.310
3 065/32nds
TY M9 (US 10 YRS)
120.180
122.050
120.080
121.275
1 19/32nds
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.
