Treasuries and Eurodollars are higher in overnight trade, in sympathy with the lower than expected factory orders report out of Germany and falling yields there. U.S. domestic rate movement is quite modest thus far, recovering little of the two session decline following Friday’s sharp post-employment report advance.
Following the January better-than-expected employment report there was very little recovery during the first few sessions and trade was generally toward the lower end of that Feb. 6 session until last Friday when an additional better than expected payroll report drove prices lower again.
Open interest fell as Eurodollar and Treasury prices advanced yesterday, indicating that as market participants take in both Yellen’s testimony and the spate of less than stellar economic reports, bearish minded traders are exiting positions.
On initial review, there is little to like in the Housing Starts and Permits, though the revision of last MoM was significant -1.9% to 0.0. Otherwise, the PPI data was weaker than expected across categories.
Eurodollar futures are lower today with the yield curve steepening throughout the first three years. The technical conditions continue to deteriorate and the risk for a precipitous fall (though not likely today) has increased.