11:44 am - Issues:
Freddie sold $3B 10-yrs and $5B 2-yr reference notes (+71)
11:39 am - Plan C: The market has been backing off the highs with trade jumpy as the ongoing testimony of Treasury's Geithner touches on a range of subjects, albeit, none of them new. The fact that they will keep talking "grabbing headlines, but ultimately doing little" has left market trading in a "shoulda, woulda, coulda" environment. The trip through 0% on the 4-wk bills has been sparking the buy side, while the reality of supply adds drag mid-curve. The fact that the Fed plans to come in and buy bonds tomorrow is aiding the longer end, while the talk of the Fed creating and selling there own bonds continues to gain currency.
11:14 am - Here We Go Again: The market has been trying to pull higher, with the weight of supply dragging while the concerns over the global economy add support. The deterioration of the Irish economy in Q4 hit the euro and helped add to an up-tick in fear (Reuters). The general feeling that the "bottom has been found" is feeding into riskier plays, while currency players note that there has been a big bump in size trade in the options as the recent (read: Geithner induced), wide, abrupt swings in ForexLand have bounced traders out of the underlying as any position, without being backed by very deep pockets, will be stopped out in a hurry "as you get whipsawed worse than ever." The Swiss puts have been quite busy as safety buying flips and traders look for a recovery.
10:35 am - Buck Up: The buck had been knocked back early as data, while as expected, was read as poor, with the buck sliding to get the euro back near 1.3650 briefly. Meanwhile, the dollar index got dunked and the yen was able to hit back near 98.00. Trade had been holding tight heading into the session and got some spunk as the data pushed through and then retrenched as Geithner got ready to hit the microphone. The market will be spooked by virtually anything out of his mouth after yesterday's absolute grinder his comments put foreign exchange players, heck, the world, through. The euro was hit hard even as short US rates fell into negative territory. The bounce in stocks has generally weighed on the yen, but it has been battling back against the euro since the open . The market seems to be waking up to the fact that there are many ends here, fiscal year-end for Japan, as well as some large financial shops and the quarter, all of which seemed to get buried in the wake of the past 2-wks action. The cleaning up of books and slowing of trade has been a contributing factor not given enough play.
09:14 am - Climbing Back Sluggishly: Trade is in a defensive position, looking to the tail end auction which is being viewed with mixed expectations. The 10-yr is lagging under the auction
08:56 am - Mixed to Lower: Treasuries slipped early on supply and rallying stocks. The day will be watching the
$24B 7-yr auction while additional supply will also show up and expectations for more to come remain high. The data was a speed bump, with the continuing claims showing record levels, again, while the
GDP number offered little surprise even as it hit at a 2 decade low. With the
jobless claims continuing down along historic levels and not expected to improve, the number has lost some cache. The curve, after a rush to steeper levels, has been seeing some unwind driven flattening, with the
2-10-yr yield spread now 189. The dollar has been falling generally and specifically against the euro, which has been hovering around 1.3600. The yen has been knocked of along with the buck, running near 98.30. Gold was flat, but got an early bid and a solid bounce on the data with spot now 943.84. Crude has snuck in a bid, running 53.98 (+1.21). The market will see, but not likely care much, about a range of speakers, as dollar fan Geithner testifies on regulation (10) with Dallas' Fisher; Richmond's Lacker (9:30 and 10) with Minneapolis' Stern late(13). The auction, $24B 7-yrs, hits late (13).
08:30 am - Offered: Treasuries are slipping with the issues of supply and rallying equities help dragon prices. The day will be devoted to the $24B 7-yr auction (equals: long day) which will pressure prices while additional supply will also show up and expectations for more remain high. The up-tick in Libor has added some concern but trade is still being hung by supply. The data will be a speed bump unless it is entirely off the mark, with the jobless claims continuing along down historic levels. The curve, after a rush to steeper levels, has been seeing some unwind driven flattening, with the 2-10-yr yield spread now 109. The dollar has been falling generally and specifically against the euro, which has been hovering around 1.3600. The yen has been knocked of along with the buck, running near 98.30.
08:16 am - Dinged: Trade has been held on offer as the market looks out to further supply and stocks pull higher