Monthly Archives: January 2012

The MorningSnapshot- 01/05

U.S. Treasuries remained stable with the 10yr still trading under 2%, and the 30yr below 3% as traders position for Friday’s nonfarm payrolls report. Germany successfully auctioned €4.057B at an average YTM of 1.93%, which was “Not so great,” according to SocGen’s Sebastien Galy. The Euro Stoxx 50 Index closed down -1.67%, led by Spain’s IBEX 35 Index & Italy’s FTSE MIB Index, which were down -1.72% and -2.04% respectively. EUR/USD declined below $1.30 after reports out of Europe that indicated services and manufacturing output contracted and inflation slowed. An increase in the cost of insuring sovereign debt was led by Spain, whose 10yr spread to German Bunds is at 304 bps (up 26 bps since Tuesday), amid more speculation the indebted nation may need to seek aid from the EU and IMF.

U.S. Equity markets were flat, with the S&P 500 up +0.02% at close, indicating traders are awaiting economic reports coming out today and Friday.

Morning Commentary
Global equities are down this morning with S&P 500 futures down -0.442%, the Euro Stoxx 50 Index down -0.92%, and the Nikkei 225 closed down -0.83%. U.S. 10yr treasury yields continue to be halted by resistance around 2.00%; overnight yields were modestly lower and curves were flatter- consistent with overall risk-off sentiment. Daily charts of U.S. treasury yields show more consolidation; while yields are up from the 1.64% on improving economic data, they remain capped by ongoing concerns with Europe and tomorrow’s U.S. non-farms payrolls.

France sold €4.02B 10yr bonds at an average YTM of 3.29%, up from 3.18% at a Dec. 1 sale, with a bid/cover 1.64 from 3.05. The EFSF will price €3B its Feb. 2015 notes to yield 40bps more than the benchmark swap rate today, compared with the 6bps spread it paid to sell €5B July 2016 bonds last year. Hungary’s debt costs also rose in an auction in which they sold 35B forint of 1yr bills; the catalyst being concern the EU and IMF may not resume aid talks.

U.S. Jobless claims dropped 15,000 last week to 372,000, slightly beating the median estimate of a Bloomberg survey showing that economists forecast 375,000 claims.

Have a great day- expect more commentary tomorrow when non-farm payrolls are released.

The MorningSnapshot- 01/04

U.S. Stock Index futures are down mildly, the Euro Stoxx 50 is trading down -1.45%, and the Nikkei is up +1.24%. U.S. 10yr yields are at their resistance level ~1.95% (50 DMA) and look to be trending lower.

Yesterday, Mitt Romney defeated Rick Santorum by just 8 votes in yesterday’s Iowa Republican caucuses. All eyes now rest on the January 10th primaries held in New Hampshire to decide who the republican frontrunner will be.

Fed Reserve Chairman Ben Bernanke is betting that, by announcing the Fed’s own forecasts for borrowing costs, monetary policy will be more effective. This is Bernanke’s largest step to provide transparency since taking office in 2006- the central bank did not even begin announcing changes in the interest rate until 1994. Minutes from the Dec. 13 FOMC meeting, released yesterday, indicate that the first forecast will be announced after their Jan. 24-25 meeting. This could boost economic growth by further delaying expectations for an increase in the benchmark rate, which has already been near 0% since Dec. 2008.

From Bloomberg:
“This is a complete 180-degree shift from the old mysterious-institution approach,” said Ethan Harris, co-head of global economic research at Bank of America Merrill Lynch in New York. “There’s been a steady move toward opening up the central bank to outside scrutiny and trying to explain to the public the logic of what they’re doing.”

The MorningSnapshot- 01/03

World stocks started the morning up significantly as German unemployment dropped twice as much as forecast, while manufacturing data out of China and India show signs of improvement. As of 7:23am CST, S&P 500 futures were up +1.481, the Euro Stoxx 50 Index was -0.21%, and the Nikkei 225 closed up +0.67%. The USD Index fell 0.6% and the 10yr treasury increased 7 bps to 1.95%.

Traders should be returning to work this week after a long holiday, and volumes should again begin increasing.

Construction spending and ISM manufacturing numbers will be released in the U.S. today at 10am EST.

More commentary will follow- there have been several developments since I last produced an update.