ECONOMIC DATA 05/08/09: all times EST
8:30 AM APRIL US NONFARM PAYROLLS (-630,000), US UNEMPLOYMENT (8.9) AVER HR EARN (0.2), AVERG WRK WEEK (33.2)
10:00 AM US WHOLESALE TRADE
SUMMARY OF DATA 05/07/09
US WEEKLY JOBLESS CLAIMS (623 K VS.635K), US NONFARM PRODUCTIVITY (0.8% VS.0.0%), UNIT LABOR COSTS (3.3% VS 3.4%) EIA INVENTORIES #: NATURAL GAS (95 BCF)
30 YEAR BOND AUCTION: BID TO COVER (2.14, YIELD 4.288%)
U.S. TREASURIES COLLAPSE TO NOVEMBER 2008 LEVELS ON EXPECTTIONS OF POSITIVE STRESS TEST RESULTS, DISAPPOINTING US 30 YEAR AUCTION.
U.S. TREASURIES fell to the lowest levels in four months on positive results from U.S. government stress tests and debt investors demanded higher than forecast yields from Thursday’s 14 billion auction of 30-year bonds. Thursday’s 30-year auction was the first scheduled since the government switched from quarterly to month offerings. The markets came under early pressure on expectations capital requirements demanded by the governments stress tests will be less than previously thought, lowering the need for risk adverse debt instruments. Supply concerns offered the major catalyst for the retest of key support levels (120.00 in June 30-years) after auction results offered a disappointing 2.14 bid to cover ratio and a yield of 4.288% (coupon rate 4.25%) The results spurred a second wave of technical buying which pushed the markets to key support levels that managed to challenge oversold technical indicators.
Treasuries came under additional pressure after the Federal Reserve released the results of the stress tests in the aftermarket. Ten U.S. banks will need to raise a total of $74.6 billion in capital. The amount was perceived as significantly lower than expected. Equities rallied and Treasuries continued their downward momentum in the wake of the perceived increase in economic stability and increases in demand for yield as risk tolerance and inflation fears increase.
Technically, June 30-year futures continued to break down and remain on target to test support at 119-285. The markets are demonstrating near oversold conditions and should stage a gap retracement back up to 121-06. Significant resistance sets up at 121-21.
US DEBT FUTURES
OPEN
HIGH
LOW
CLOSE
CHANGE
US M9 (US 30 YRS)
122-045
122-090
120-00
120-140
-1.29/32nds
TY M9 (US 10 YRS)
120-305
121-020
119-280
120-080
-27.5/32nds
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.
