SUMMARY OF UPCOMING DATA 02/12/10
8:30 AM US RETAIL SALES (0.3%, EX AUTO 0.5%)
9:55 AM UNI MICH SURVEY (75.0)
10:00 AM US BUSINESS INVENTORIES (0.2)
10:30 AM EIA INVENTORY # NAT GAS
11:00 AM EIA INVENTORY # CRUDE
DATA RESULTS 02/11/10
US WEEKLY JOBLESS CLAIMS (440 K/470 K)
US 30 YEAR NOTE AUCTION (BID TO COVER 2.36, YIELD 4.376%)
US DEBT REVIEW AND OUTLOOK
US Treasuries quiet drifted lower for a third session after US weekly jobless claims posted a less than expected increase and the results of a record tying US 30 year bond auction disappointed yet again. Higher yields continued to plague the Treasury complex as market participants foresee rate increases coming later this year. Futures contracts on the CBOT show traders see a 22 percent chance the Federal Reserve will lift the target rate by June. This is up from 16 percent in the previous week. The markets appear to be betting on the integration of improving employment numbers and sustainable global revenue growth. And since so little of the influence of zero rates appeared to reach beyond the financial sector (Anyone have a 4 percent credit card?), a rate hike cycle might actually promote confidence in US monetary policy as it would demonstrate a willingness to promote some sense of fiscal responsibility. (I know, what color is the sky in my world?-but hopeless never resuscitated anything.)
Technically, US 30 year bonds moved through support at 117-04 and managed to penetrate a key support level at 116-28. The market should look to fill in the gap with a pullback to 117-26. This level could be a set up for a selling opportunity with the market likely to retest 116-28, with a break of this level possibly setting up a move to 116-18, where another defensive support could be found.
US EQUITY REVIEW AND OUTLOOK
S&P Futures continued their volatile, volatile ways, with the major indices closing at their best levels in two weeks. A better than expected reading on weekly jobless claims gave the markets hope for stabilization for the employment picture in the US, while risk tolerance across the global breathed a cautious sigh of relief as the EU and Greece have come to a limited assurance of support. US weekly jobless claims for the week fell by 43,000, three times the number expected. Continuing claims dropped to 79 K.
Material and energy stocks were among the best performers today, as commodity prices rebounded in the wake of a pullback in the US Dollar. Precious metals were among the best performers. Financials lagged the major gainers after the UK indicated that the leading economies are close to agreeing on a global bank tax. Additional reports of renewed financial regulation strategies in the US also pressured the sector. Markets and risk exposed instruments remain vulnerable as the levels of uncertainty regarding global developments and credit worthiness remain high.
Technically, March S&P’s close above 1074.50 suggest continued upside potential to test the 1083.00 level. This point should offer resistance, allowing the market to engage in a pullback to 1065.80.
Prepared by Rich Roscelli & Paul Brittain.
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SUMMARY OF UPCOMING DATA 02/12/10