ECONOMIC DATA 05/19/09: all times EST
8:30 AM US HOUSING STARTS (540,000)
10:00 AM STATE STREET CONFIDENCE INDEX
ECONOMIC DATA SUMMARY 05/18/09
US HOMEBUILDERS CONFIDENCE INDEX (16 VS. 14 PREV)
U.S. TREASURIES PLUMMET AS EQUITIES RALLY ON IMPROVED ECONOMIC SENTIMENT, RISK AVERSION SUBSIDIES.
U.S. TREASURIES fell strongly today, closing near lows of session, as better than expected readings on homebuilder confidence and earnings from home improvement giant Lowes weakened demand for safe haven, low yielding assets such as Treasuries. Yields for debt on the long end of the curve rose the most in a week as equities rebounded from last week’s drop. Homebuilders, financials, and energies led the flight from risk adverse entities. In addition, counterparties to interest rate swap contracts sold Treasuries in order hedge themselves against the risk of fixed payment exposure.
Looking ahead, the markets are anticipating the return of supply concerns when the record pace of Treasury debt offering returns next Tuesday after a two week hiatus. Traders should expect the markets to enter a period of heightened volatility as the historic trend of the “summer doldrums” take hold of market psychology. Support and resistance levels may be difficult to manage as actual levels may be pierced on a number of false breakouts. Expect a volatile week in store ahead of the return of supply concerns.
Technically, June 30-year futures again failed to hold above the 123-120 range. This suggests that the upside range has achieved a double top. Momentum should set to move toward the downside. Look for a test of initial support at 120-27.5. Ahead of the long weekend, 30-year futures should find support at 120-11.5. Resistance should pull back to set up at 122-27.5.
US DEBT FUTURES
OPEN
HIGH
LOW
CLOSE
CHANGE
US M9 (US 30 YRS)
122-285
123-190
121-110
121-250
-1.045/32nds
TY M9 (US 10 YRS)
121-145
121-140
120-185
120-265
-22/32nds
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.
