DATA RESULTS 04/02/10
8:30 AM US NONFARM PAYROLLS (190K/162K)
8:30 AM US UNEMPLOYMENT (9.7 %/9.8%)
DATA RESULTS 04/01/10
US WEEKLY JOBLESS CLAIMS (436 K/440 K)
ISM MANUFACTURING INDEX (59.6/56.3)
US CONSTRUCTION SPENDING (-0.3/-0.0)
EIA INVENTORY-NAT GAS (12 BCF)
US TREASURY AUCTION ANNOUNCEMENT US 3YR ($40B), 10YR ($21B), 10YR TIPS ($18B), 30 YR ($13B)
US DEBT REVIEW AND OUTLOOK
US Treasuries continued their sell off on Thursday and Friday after the US payroll number came in relatively strong, particularly after revisions to the January and February figures boosted the overall job growth and helped to shine a light on potential jumping of points of sustained revenue and job growth (example would be manufacturing)
Treasuries continue to fall in the overall wake of dependence on record levels of sovereign debt supply supporting capital needs for government stimulus (Federal Tax revenues are currently providing only about half of the perceived capital needed to fund current stimulus) Adding in future liabilities such as changes to the US health care systems and the sales pitch for buying Treasury debt will need to be an energetic one at best. Next week will offer some initial value perceptions of Treasury as a safe & long term investment with auctions on US 3, 10, 10 year TIPS, and 30 years. Whether this jobs report is a turning point for the perceived influence of record stimulus remains to be seen, this could be the beginning of new focus for perceived value-the importance of sustainability of revenue both in the US and Globally. This shift in focus may ramp up another level of concern regarding the effectiveness of sovereign debt as a risk reward tool.
Technically, June 30 year Treasuries have move back down to test the low end of its range at 114-28. Continued downside momentum may set up test of 114-18. Market appears uncertain of breaking out of recent trading range and should continue to form a range based on the formation of lower lows. Initial recovery should take place with market supported by possible recovery back up to 115-09.
US EQUITIES REVIEW AND OUTLOOK
Equity futures posted stronger gains by the end of the week as the US employment data posted the best jobs gains in nearly three years. With the cash stock markets closed around the world for the Good Friday Holiday, it won’t be until next week that market participants will be able to digest the data completely. The positive sentiment may have some more carry through as some many will be viewing the moment to moment action on their new Apple I Pads, which officially goes on sale Saturday.
Thursday as global risk sentiment received a shot in the arm. China, Great Britain, and the US had better than expected reports on manufacturing to boost risk tolerance. A better than expected reading on US weekly jobless claims also helped to boost risk tolerance
Thursday: Technically, June S&P futures outlook remains the same- a degree of cautious optimism that remains vulnerable to selling into strength for the time being-though expecting an upward bias for early part of this week. Market should retest 1173.00 resistance levels; with 1178.00 and 1183.00 as near term top of range. 1156.75 should remain as a strong support.
Friday: June S&P futures closed at 1178.00, the second tier of resistance. Continued momentum should set up test of 1183.00, though a pullback to 1168.00 appears likely.
Prepared by Rich Roscelli & Paul Brittain.
Please voice your market opinions, thoughts and questions. Email to: rich@binvstgrp.com
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