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Reuters
US Treasuries make headway but rally lacks gusto
Thursday August 26, 5:15 pm ET
(Updates prices)
By Pedro Nicolaci da Costa
NEW YORK, Aug 26 (Reuters) - U.S. Treasury prices climbed on Thursday after an increase in jobless claims, though the rally seemed to lack conviction as investors awaited more conclusive data on the labor market.
"We're all bearish. Oil is backing off, stocks are up, there's peace in Najaf, the world's a safer place," said one trader at a U.S. primary dealer.
The benchmark 10-year note (US10YT=RR) rose 13/32 in price, while yields dipped to 4.22 percent from 4.27 percent, leaving them toward the bottom of a recent trading range. Market-watchers place the next downside target for 10-year yields at 4.20 percent to 4.21 percent.
Bond investors had been tracking oil markets for a sense of direction, but that relationship seemed to break down on Thursday, with Treasuries rising despite a continued decline in crude costs.
Higher oil costs portend slower domestic consumption, putting a drag on growth and benefiting safe-haven investments like government bonds. Much of the recent downward tug on bond prices had come from a slide in crude oil prices after record highs were reached on Friday.
On the economic front, two reports on the job market showed further signs of weakness, stoking old concerns that the recovery of the world's largest economy could remain jobless.
If that were the case, the Federal Reserve might be forced to slow the pace of interest rate hikes, providing a boon for bonds.
Analysts say next week's government payrolls report for August will shed light on the matter, and could shove yields some 20 basis points in either direction, depending on the results.
The early U.S. data showed initial jobless claims edged up to 343,000 from 333,000 the previous week. That was slightly more than expected, but half the gain was linked to Hurricane Charley and discounted as transitory.
Such a level of claims would typically be associated with reasonable gains in payrolls of at least 150,000 a month. However, that connection has faded in recent months with payrolls coming in well below expectations time after time.
On Thursday afternoon, yields on the new two-year note (US2YT=RR) stood at 2.48 percent, having fetched 2.494 percent in Wednesday's rather disappointing $24 billion auction.
The five-year note (US5YT=RR) rose 7/32, nudging yields down to 3.41 percent from 3.46 percent. The 30-year bond (US30YT=RR) jumped 18/32, leaving yields at 5.01 percent.
While the broader market has been rangebound, the yield curve has been on the move. The spread between two- and 10-year yields has narrowed to 173 basis points, the lowest since April 2002, indicative of a flattening trend in the curve.
"The unwinding of the energy price spike should be a precursor to rising Fed tightening expectations, therefore causing the yield curve to bear flatten near-term," said Richard Gilhooly, fixed-income strategist at BNP Paribas.
The Conference Board also reported its index measuring help wanted ads dipped to 37 in July from an already subdued 39 in June. This series has been stagnant for five months now, and while many jobs are advertised online these days, it still hardly speaks of a strong hiring market.
While many analysts are forecasting a payrolls rise of 150,000 in August, few are truly confident in their predictions.
Fed officials, on the other hand, have been adamantly upbeat on the economy while reiterating their intention to raise interest rates in a steady fashion.
The bond market harbors far more doubts about the economy and yields have fallen even in the face of hikes in official rates. Since the Fed first started tightening in June, 10-year yields have dropped over 40 basis points.
e da futuresource.com
DJ Debt Futures Review: Get Bounce After Technical Support Holds
By Allen Sykora
BEND, Ore. (Dow Jones)--Interest-rate futures in Chicago settled higher
Thursday but are being described as largely in a consolidation mode, traders
there said. Activity was said to be quiet.
Sep 10-year notes settled up 8.5 ticks at 112-25.5, Sep Treasury bonds
gained 14 ticks to 111-08, and Mar Eurodollars added 1 basis point to 97.51.
The bond market appeared to be getting a bounce after holding support
earlier in the week, said Richard Heyboer, account executive with Fox
Investments, a division of Man Financial.
"A couple of days ago, they started to sell off a little bit," he
said from Chicago. "They found support right at the 20-day moving average. We
have a continuation of a minor rally after a minor drop."
On Tuesday, Sep bonds held at a low of 110-02; the 20-day average was
just below this at 109-29. Then Wednesday, Sep bonds fell no further than 110-08; the 20-day average was at 110-03. On Thursday, the contract started to put some distance between itself and the 20-day average, trading no lower than 110-23, with the average passing through 110-10.
Overall, however, Heyboer characterized the debt market as trading
sideways since the July employment report on Aug. 6. Ever since the next
trading day on Aug. 9, the Sep bonds have been oscillating in a band between
110-02 and 111-26.
"I don't know what's going to shake us up, unless we get some news," he said. "There's a lot of treading water."
John Nyhoff, executive vice president for trading and research in Chicago
for Bank of Tokyo/Mitsubishi Futures, said some of the day's ebb and flow in
interest-rate futures was connected to oscillations in crude-oil futures. Oct
crude oscillated between $42.50 and $43.75 during open-outcry hours before
finally settling with a 37-cent loss to $43.10.
"That's taken a little bit of the inflation onus off the market, so we've
moved ever so slightly higher," said Nyhoff.
Weekly first-time unemployment claims rose slightly more than expected -
a 10,000 increase to 343,000. However, about half of this gain was blamed on
Hurricane Charley.
The only other fundamental influence is some worries about the auto
sector.
"There are some reports that some of the domestic auto manufacturers
really aren't doing that well during the month of August in spite of efforts
to offer incentives, so there may be some reduction in production levels going
into the fourth quarter," Nyhoff said. "That may be a little deterrent to
stronger economic growth going forward."
Technically, however, the futures have not done anything noteworthy, he
said.
"We haven't taken out the recent highs and haven't gotten anywhere close
to the lows of the last couple of weeks," said Nyhoff.
Mar Eurodollars held above initial support around Tuesday's low of 97.45
but also held below resistance at the Aug. 18 high of 97.61. Further
resistance is seen at the Aug. 6 spike to 97.655 in the wake of the last jobs
report.
In Sep 10-year notes, said Nyhoff, the market remained just below initial
resistance around 113-even, the high from Friday. Further resistance is seen
at the 113-10.5 high hit after the Aug. 6 jobs report, then a Bollinger-band
level of 113-20.
Support is seen at a Bollinger-band level of 112-05 to the 112-03 low
from Tuesday, then the area around 111-30.5 reached a couple of times earlier
this month.
Second-quarter gross domestic product is due out Friday at 0730 CT (1230
GMT), with the forecast calling for a revision to a 2.7% rise from the
originally reported 3.0%. The chain-weighted price index for the second
quarter, also due out at 0730 CT, is expected to rise by 3.2%.
The University of Michigan is scheduled to issue its end-of-August
consumer-sentiment index around 0845 CT (1345 GMT). A reading of around 94.1
is forecast, compared to 94.0 in the middle of the month.
Another key event for Friday is a 0900 CT (1400 GMT) appearance by
Federal Reserve Alan Greenspan before a Kansas City Fed symposium being held
in Jackson Hole, Wyo.
-By Allen Sykora; Dow Jones Newswires; 541-318-8765;
[email protected]
US Treasuries make headway but rally lacks gusto
Thursday August 26, 5:15 pm ET
(Updates prices)
By Pedro Nicolaci da Costa
NEW YORK, Aug 26 (Reuters) - U.S. Treasury prices climbed on Thursday after an increase in jobless claims, though the rally seemed to lack conviction as investors awaited more conclusive data on the labor market.
"We're all bearish. Oil is backing off, stocks are up, there's peace in Najaf, the world's a safer place," said one trader at a U.S. primary dealer.
The benchmark 10-year note (US10YT=RR) rose 13/32 in price, while yields dipped to 4.22 percent from 4.27 percent, leaving them toward the bottom of a recent trading range. Market-watchers place the next downside target for 10-year yields at 4.20 percent to 4.21 percent.
Bond investors had been tracking oil markets for a sense of direction, but that relationship seemed to break down on Thursday, with Treasuries rising despite a continued decline in crude costs.
Higher oil costs portend slower domestic consumption, putting a drag on growth and benefiting safe-haven investments like government bonds. Much of the recent downward tug on bond prices had come from a slide in crude oil prices after record highs were reached on Friday.
On the economic front, two reports on the job market showed further signs of weakness, stoking old concerns that the recovery of the world's largest economy could remain jobless.
If that were the case, the Federal Reserve might be forced to slow the pace of interest rate hikes, providing a boon for bonds.
Analysts say next week's government payrolls report for August will shed light on the matter, and could shove yields some 20 basis points in either direction, depending on the results.
The early U.S. data showed initial jobless claims edged up to 343,000 from 333,000 the previous week. That was slightly more than expected, but half the gain was linked to Hurricane Charley and discounted as transitory.
Such a level of claims would typically be associated with reasonable gains in payrolls of at least 150,000 a month. However, that connection has faded in recent months with payrolls coming in well below expectations time after time.
On Thursday afternoon, yields on the new two-year note (US2YT=RR) stood at 2.48 percent, having fetched 2.494 percent in Wednesday's rather disappointing $24 billion auction.
The five-year note (US5YT=RR) rose 7/32, nudging yields down to 3.41 percent from 3.46 percent. The 30-year bond (US30YT=RR) jumped 18/32, leaving yields at 5.01 percent.
While the broader market has been rangebound, the yield curve has been on the move. The spread between two- and 10-year yields has narrowed to 173 basis points, the lowest since April 2002, indicative of a flattening trend in the curve.
"The unwinding of the energy price spike should be a precursor to rising Fed tightening expectations, therefore causing the yield curve to bear flatten near-term," said Richard Gilhooly, fixed-income strategist at BNP Paribas.
The Conference Board also reported its index measuring help wanted ads dipped to 37 in July from an already subdued 39 in June. This series has been stagnant for five months now, and while many jobs are advertised online these days, it still hardly speaks of a strong hiring market.
While many analysts are forecasting a payrolls rise of 150,000 in August, few are truly confident in their predictions.
Fed officials, on the other hand, have been adamantly upbeat on the economy while reiterating their intention to raise interest rates in a steady fashion.
The bond market harbors far more doubts about the economy and yields have fallen even in the face of hikes in official rates. Since the Fed first started tightening in June, 10-year yields have dropped over 40 basis points.
e da futuresource.com
DJ Debt Futures Review: Get Bounce After Technical Support Holds
By Allen Sykora
BEND, Ore. (Dow Jones)--Interest-rate futures in Chicago settled higher
Thursday but are being described as largely in a consolidation mode, traders
there said. Activity was said to be quiet.
Sep 10-year notes settled up 8.5 ticks at 112-25.5, Sep Treasury bonds
gained 14 ticks to 111-08, and Mar Eurodollars added 1 basis point to 97.51.
The bond market appeared to be getting a bounce after holding support
earlier in the week, said Richard Heyboer, account executive with Fox
Investments, a division of Man Financial.
"A couple of days ago, they started to sell off a little bit," he
said from Chicago. "They found support right at the 20-day moving average. We
have a continuation of a minor rally after a minor drop."
On Tuesday, Sep bonds held at a low of 110-02; the 20-day average was
just below this at 109-29. Then Wednesday, Sep bonds fell no further than 110-08; the 20-day average was at 110-03. On Thursday, the contract started to put some distance between itself and the 20-day average, trading no lower than 110-23, with the average passing through 110-10.
Overall, however, Heyboer characterized the debt market as trading
sideways since the July employment report on Aug. 6. Ever since the next
trading day on Aug. 9, the Sep bonds have been oscillating in a band between
110-02 and 111-26.
"I don't know what's going to shake us up, unless we get some news," he said. "There's a lot of treading water."
John Nyhoff, executive vice president for trading and research in Chicago
for Bank of Tokyo/Mitsubishi Futures, said some of the day's ebb and flow in
interest-rate futures was connected to oscillations in crude-oil futures. Oct
crude oscillated between $42.50 and $43.75 during open-outcry hours before
finally settling with a 37-cent loss to $43.10.
"That's taken a little bit of the inflation onus off the market, so we've
moved ever so slightly higher," said Nyhoff.
Weekly first-time unemployment claims rose slightly more than expected -
a 10,000 increase to 343,000. However, about half of this gain was blamed on
Hurricane Charley.
The only other fundamental influence is some worries about the auto
sector.
"There are some reports that some of the domestic auto manufacturers
really aren't doing that well during the month of August in spite of efforts
to offer incentives, so there may be some reduction in production levels going
into the fourth quarter," Nyhoff said. "That may be a little deterrent to
stronger economic growth going forward."
Technically, however, the futures have not done anything noteworthy, he
said.
"We haven't taken out the recent highs and haven't gotten anywhere close
to the lows of the last couple of weeks," said Nyhoff.
Mar Eurodollars held above initial support around Tuesday's low of 97.45
but also held below resistance at the Aug. 18 high of 97.61. Further
resistance is seen at the Aug. 6 spike to 97.655 in the wake of the last jobs
report.
In Sep 10-year notes, said Nyhoff, the market remained just below initial
resistance around 113-even, the high from Friday. Further resistance is seen
at the 113-10.5 high hit after the Aug. 6 jobs report, then a Bollinger-band
level of 113-20.
Support is seen at a Bollinger-band level of 112-05 to the 112-03 low
from Tuesday, then the area around 111-30.5 reached a couple of times earlier
this month.
Second-quarter gross domestic product is due out Friday at 0730 CT (1230
GMT), with the forecast calling for a revision to a 2.7% rise from the
originally reported 3.0%. The chain-weighted price index for the second
quarter, also due out at 0730 CT, is expected to rise by 3.2%.
The University of Michigan is scheduled to issue its end-of-August
consumer-sentiment index around 0845 CT (1345 GMT). A reading of around 94.1
is forecast, compared to 94.0 in the middle of the month.
Another key event for Friday is a 0900 CT (1400 GMT) appearance by
Federal Reserve Alan Greenspan before a Kansas City Fed symposium being held
in Jackson Hole, Wyo.
-By Allen Sykora; Dow Jones Newswires; 541-318-8765;
[email protected]
, stamattina mi sono alzato, ho guardato l'apertura e sono uscito ad ossigenarmi...continuando a ripetere a me stesso una frase che ho letto ieri su un sito che suona più o meno così "in genere l'irrazionalità dei mercati costa più di quanto un singolo individuo possa permettersi di perdere" - ho rivisto il grafico del "trappolone" di martedi e mi sono ulteriormente depresso - dicono gli analisti che i bond salgono perchè il petrolio a 50 usd rallenta la crescita economica...scende il petrolio e i bond salgono ancora perchè...il petrolio a 42 usd non porta inflazione 
