ECONOMIC DATA 06/18/09: all times EST
8:30 AM US JOBLESS CLAIMS (610K)
10:00 AM US LEADING INDICATORS (1.0%)
10:00 AM PHILADELPHIA FED INDEX (-15.0)
10:30 AM EIA NAT GAS
11:00 AM US DEBT ANNOUNCEMENT (2, 5, 7 YEAR NOTES
ECONOMIC DATA 06/ 17/ 09
US CPI (0.1%, EX 0.1%)
EIA INVENTORY REPORT (CL-3.9 m vs. -4.4m/+3.4 M RBOB/+0.3 M DIS/CAPACITY UTIL 85.9)
U.S. TREASURIES PULLBACK FROM EARLY GAINS HAS MARKETS CHANGES FOCUS FROM RECESSION TO AUCTION OUTLOOK.
U.S. Treasuries posted gains on Wednesday, though the markets pulled back significantly from session highs. This allowed for an initial resistance level of 116-15 in the September 30-year contact to remain intact, setting up momentum for a downward turn to a short term support of 114-22.
Initial strength in Treasuries was supported by a lower than expected reading in the June CPI (Consumer Price Index). Both headline and core numbers increased by a lower than expected 0.1%. Expected increases in energy costs were offset by equivalent pullbacks in food costs, while indexes among the retail and transportation sectors offered a mixed picture that translated into a weaker than expected reading. CPI acted as a real catalyst for Treasuries with regards to the year over year measure of price increases, which determined that the cost of living in the United States declined by the largest amount in over 60 years. This measure was supported primarily by the record declines in housing and automobile prices, as well as inventory reduction strategies undertaken by businesses.
Overall, this painted an ideal scenario for Treasuries on Wednesday-waning inflation concerns and the notion of an extended period of economic recovery which was supported by a weaker forecast by Federal Express. The momentum faded and turned negative late in the session as the pendulum of focus swung to the side of supply concerns ahead of the announcement of next week’s US two-, five- and seven-year note auctions. The auctions begin on June 23th and come on the tail end of increased buybacks by the Federal Reserve.
Technically, Sept 30-year Treasuries pierced but failed to hold above the target resistance level of 116-15. This has set the market up for a swing back to the narrow support level of 114-28. A break of this level should allow for a test of 113-17. The top end of resistance is forming at 118-04.
US DEBT FUTURES
OPEN
HIGH
LOW
CLOSE
CHANGE
US U9 (US 30 YRS)
116-030
117-040
115-210
116-100
+20/32nds
TY U9 (US 10 YRS)
115-075
115-250
114-255
115-110
+8.5/32nds
Prepared by Rich Roscelli & Paul Brittain.
EMAIL QUESTIONS OR COMMENTS TO RICH@BINVSTGRP.COM
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