ECONOMIC DATA 03/24/2009: all times EST
10:00 AM STATE STREET INVEST CONF INDEX
1:00 PM US 2 YEAR NOTE AUCTION ($40 B)
ECONOMIC DATA 03/23/09 US EXISTING HOMES SALES (4.72 M VS. 4.5 M EXP)
U.S. TREASURIES SUBDUDED. MARKETS LOSE SOME GROUND IN WAKE OF EQUITY RALLY SUPPORTED BY EXPECTATIONS REGARDING POSSIBLE FED PARTICIPATION IN DEBT AUCTION.
U.S. Treasuries traded in relatively narrow range on Monday, continuing the pullback from last week’s record post FOMC rally, as the details of the Treasury Plan to create a market for the balance of toxic assets on financial institutions books was met with a resounding cheer in the equity markets. With the major indices rising close to 7% today, it would seem that lower yielding fixed income should have fallen more sharply. This was not the case, due to the fact that Treasuries continue to hold a bid in the market in expectation of the Federal Reserve becoming a major purchaser of Treasury Debt.
This week, the U.S. Treasury is scheduled to auction of $134 billion worth of government debt. The two key auctions that the markets will be watching will be the nearly $75 billion of US 2 and 5 year notes scheduled for auction this week. Market direction for the week could be determined by the Federal Reserve making its presence known as a buyer within these auctions. If the markets perceive that the Federal Reserve is not going to jump right out of the starting gate with purchases of Treasury Debt, then overall supply concerns will likely reenter market and could cause further erosion of last week’s upward spike in prices.
Treasuries also came under pressure today after a report on existing home sales showed the largest monthly gain since July 2003.
Technically, the move up in June 30-year futures is coming under pressure as the markets seemed poised to retrace the gap back to an initial support level of 127.290. A break of this level could leave the contract open to retest a long term support level at 125.12. Look for an upward resistance level at 130.145. If this breaks, market could be on track to test 133.050.
US DEBT FUTURES
OPEN
HIGH
LOW
CLOSE
CHANGE
US M9 (US 30 YRS)
129.030
129.235
128.075
128.195
-20.5/32nds
TY M9 (US 10 YRS)
124.165
124.270
124.030
124.090
-08/32nds
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.
