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The Treasury market enters the Tuesday US trade sitting just under the highs of the last four trading sessions. There appears to be a slight shift toward a risk-off vibe in the wake of news that Moody’s downgraded Italy, Spain and Portugal overnight and also because of talk they might also cut the credit ratings of France, Britain and Austria. Countervailing the fresh fears toward the Euro zone are results from a widely followed German ZEW survey, which reached the highest level since April of last year. Perhaps even more importantly, the ZEW suggested that the recent slowdown in German growth “wasn’t likely to last”. However, the markets are likely to have their tone set this morning by an Italian auction of 6 billion Euro worth of debt. It should be noted that other debt yields from the Euro zone this morning were also showing declines and that helped yields decline in the Italian auction this morning! In addition to the European debt auction influences, all eyes are likely to shift back toward the US in the wake of the US retail sales release, which is generally expected to show a modest rise of +0.7 to +0.8% over the prior month. Also due out during the session today, is a private small business index survey, Manufacturing Inventories, and Import & Export prices. The markets will also be presented with two Fed speeches and testimony from the US Treasury Secretary to a Senate Finance Committee on the 2013 US budget. While anxiety toward the Euro zone has generally remained in place, it would seem like the markets quickly discounted the ratings issues overnight and seeing a decline in Italian debt yields, in the Auction this morning, could further tamp down the flight to quality interest in US Treasuries. While the bid to cover ratio of the Italian auction wasn’t as strong as some might have hoped for, the yields did fall and that might be the main take away from the most recent Euro zone debt development. On the other hand, to fully kick up macro economic optimism in the Treasury market this morning, probably requires retail sales readings that meet or exceed expectations. It is also possible that Treasuries will take a portion of their direction from the action in the US equity markets today. Traders should not discount commentary from the Fed later today, as the last FOMC meeting apparently showed some dissent within the ranks of the Fed and therefore the market will probably take note of the early speech from the Philly Fed’s Plosser. So far, the release of the 2013 US Budget hasn’t had a definitive impact on Treasury prices, but that could change today if the Treasury Secretary foments severe bi-partisan fighting.
Interest Rates: Markets watching Philly Fed Speech & EU News
by Dave Hightower on February 14, 2012
Below is a sample of The Hightower Report’s Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!
The Treasury market enters the Tuesday US trade sitting just under the highs of the last four trading sessions. There appears to be a slight shift toward a risk-off vibe in the wake of news that Moody’s downgraded Italy, Spain and Portugal overnight and also because of talk they might also cut the credit ratings of France, Britain and Austria. Countervailing the fresh fears toward the Euro zone are results from a widely followed German ZEW survey, which reached the highest level since April of last year. Perhaps even more importantly, the ZEW suggested that the recent slowdown in German growth “wasn’t likely to last”. However, the markets are likely to have their tone set this morning by an Italian auction of 6 billion Euro worth of debt. It should be noted that other debt yields from the Euro zone this morning were also showing declines and that helped yields decline in the Italian auction this morning! In addition to the European debt auction influences, all eyes are likely to shift back toward the US in the wake of the US retail sales release, which is generally expected to show a modest rise of +0.7 to +0.8% over the prior month. Also due out during the session today, is a private small business index survey, Manufacturing Inventories, and Import & Export prices. The markets will also be presented with two Fed speeches and testimony from the US Treasury Secretary to a Senate Finance Committee on the 2013 US budget. While anxiety toward the Euro zone has generally remained in place, it would seem like the markets quickly discounted the ratings issues overnight and seeing a decline in Italian debt yields, in the Auction this morning, could further tamp down the flight to quality interest in US Treasuries. While the bid to cover ratio of the Italian auction wasn’t as strong as some might have hoped for, the yields did fall and that might be the main take away from the most recent Euro zone debt development. On the other hand, to fully kick up macro economic optimism in the Treasury market this morning, probably requires retail sales readings that meet or exceed expectations. It is also possible that Treasuries will take a portion of their direction from the action in the US equity markets today. Traders should not discount commentary from the Fed later today, as the last FOMC meeting apparently showed some dissent within the ranks of the Fed and therefore the market will probably take note of the early speech from the Philly Fed’s Plosser. So far, the release of the 2013 US Budget hasn’t had a definitive impact on Treasury prices, but that could change today if the Treasury Secretary foments severe bi-partisan fighting.
Tags: Bonds, Financials, Interest Rates, Notes
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