SUMMARY OF UPCOMING DATA 03/12/10
8:30 AM US RETAIL SALES (-0.2%), EX AUTO (0.0%)
9:55 AM US CONSUMER SENTIMENT (74.0)
10: 00 AM US BUSINESS INVENTORIES (0.2%)
DATA RESULTS 03/10/10
US INTERNATIONAL TRADE (-$38B/-$41B)
US WEEKLY JOBLESS CLAIMS (462 K/460 K)
EIA NAT GAS INVENTORY (-111 BCF)
US 30 YEAR BOND AUCTION (B/C 2.88, YIELD AWARDED 4.679)
US DEBT REVIEW AND OUTLOOK
US 30 YEAR FUTURES RALLY AFTER SURPRISE DEMAND FOR $13 BILLION TREASURY AUCTION
AUCTION PARTICIPANTS TAKE ADVANTAGE OF RECORD US 2 YEAR/30 YEAR SPREAD
US TREASURIES bucked their recent trend, with the flattening yield curve taking a break. Longer yielding Treasuries spiked higher after Thursday’s well received US 30 year bond auction. The non record amount of debt received a strong boost from bidders that were attracted by the record 2 year/30 year spread differential. Market participants who have been plowing or parking money in the short end of the curve reallocated some of their portfolios, taking cues from the continuing demand for debt across the corporate spectrum. As the spread between corporate debt and Treasuries continues to narrow, it is not surprisingly to occasionally have elements align that take advantage of that differential. Bonds received additional support from reports that China is not planning to slowdown its overall purchasing of US debt. Perhaps this move higher is simply a blip up based on a reallocation of portfolios while the overall sovereign debt picture around the world remains challenged by visible and developing headwinds (or rogue waves).
Technically, June 30 year futures support/resistance levels remain near the same levels. A double top appears to be forming at 116-25 level. Look like there will be another attempt to test 117-04 resistance. The market needs to pierce and hold above this level; otherwise a lower high setup should form pushing the markets to test the downside of the recent trading range at 115-20. A break of this level could set up a further downside move to test 114-20.
US EQUITY REVIEW AND OUTLOOK
Equities move higher, S&P futures close above January highs on end of day light technical buying.
Markets find excuses to shrug off weak to neutral data. Concern for China fiscal policy subsides.
Stocks closed at their January highs on Thursday. The major indices rallied near session end on light technical buying and cautious optimism after release of relatively weak data failed to fuel position selling. Concern regarding China’s inflation picture and possible strategies to reign in the countries growth to a manageable level appears to be relegated to a hold/watch sentiment from a buy (pardon the stock trading analogies).
The rally, while driven by relatively low volume, was broad based with financials moving higher supported by a 5% jump in Citigroup shares. The stock was lifted by comments from the CEO stating the banks goal to generate a 1.25% to 1.50% return on its core business assets. The takeaway positive sentiment here can be focused on the “core assets” comments as the company undertakes the long overdue strategy of divesting its bloated asset base. When the dust settles, the firm & businesses left standing at Citigroup will have to generate revenue through internal efficiencies and effective competition. Will the aftermath live up to the hype and current good will? Keep these questions in mind. Energies moved higher as crude prices stabilized and M&A activity shined on the sector.
Technically, June S&P futures pierced & held above the highs from January. The contract has some additional room to move to the upside, with resistance setting up at 1149.50. A break of this level could see the market move to test 1154.40. Daily RSI indicator suggests potentially overbought market. Initial support sets up at 1139.00, with a break of this level setting up a possible retracement on profit taking to 1131.80.
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US DEBT FUTURES |
OPEN |
HIGH |
LOW |
CLOSE |
CHANGE |
|
US M0 (US 30 YRS) |
116-09 |
116-25 |
115-28 |
116-19 |
+9/32nds |
|
SP H0 (S&P 500) |
1137.80 |
1146.50 |
1134.10 |
1145.90 |
+4.80 |
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Prepared by Rich Roscelli & Paul Brittain.
PLEASE VOICE YOUR MARKET OPINIONS, THOUGHTS, AND QUESTIONS. EMAIL TO RICH@BINVSTGRP.COM
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