SUMMARY OF UPCOMING DATA 03/30/10
10:00 AM US CONSUMER CONFIDENCE (50.0)
DATA RESULTS 03/29/10
US PERSONAL INCOME (0.0/0.1)
US CONSUMER SPENDING (0.3/0.3)
US DEBT REVIEW AND OUTLOOK
US Treasuries traded with a flat to negative bias though out most of Monday’s market session. Buying demand was light as global risk tolerance increased as the Greek fiscal crisis appeared to find a figurative finger to stick in its crumbling financial dam. The Greek government floated a 7 year syndicated bond issue. The country raised about 5 billion Euros and sparked a rebound in higher yielding currencies and securities. While this happy start to the week put pressure on Treasuries, the US Dollar, and the Japanese Yen (securities representing low risk/yield) the aftermath of the high yield which Greece had to pay in order to float its issue seemed to emerge by the end of the session as Treasuries drifted back to close nearly unchanged on the long end of the yield curve.
Data releases in the US were relatively light on Monday, with the cautiously positive sentiment that guided Monday’s trading supported by a continued gain in US consumer spending. The market may begin to enter a narrow trading range this week as volume drops ahead of the Easter/Passover holidays and majority of capital remains sidelined ahead of Friday’s US employment data. It would be advisable not to rule upticks in the Treasury complex volatility though, as some positioning squaring ahead of the end of the quarter could spur some unexpected prices jumps and dips.
The technical outlook for June 30 Treasuries remain bearish in the medium to long term, though some short covering rallies may appear this week. The contract appears to be finding support at the 114-28 level. This could trigger a short covering rally which may pull the contract up to test resistance at 116-04 and 116-15. The market’s downside target sets up at 114-06.
US EQUITIES REVIEW AND OUTLOOK
US Equities posted a cautiously optimistic session to begin the shortened holiday trading week. Data showing continued growth in US consumer spending and a rebound in risk tolerance as the euro zone fiscal crisis appears to have found some footing prompted a drop in the US dollar, fueling gains in commodity and equity prices.
Stocks appear to be basing their gains on a measured sense of hope that Friday’s employment figures will show last month to have the largest job creation figures in three years. This week will likely have a more cautious tone than other payroll release periods, as the major equity markets will be closed on the day of the data’s release.
Technically, June S&P futures remain vulnerable to range trading, though expecting an upward bias for early part of this week. Market should retest 1173.00 resistance level, with 1183.00 as near term top of range. 1156.75 should remain as a strong support.
Prepared by Rich Roscelli & Paul Brittain.
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