DATA RELEASES 04/30/10
8:30 AM US 1ST Q GDP 3.4%
8:30 AM EMPLOYMENT COST INDEX (0.4)
9:45 AM CHICAGO PMI (60.0)
9:55 AM US CONSUMER SENTIMENT (71.0)
DATA RESULTS 04/29/10
• US jobless claims 448 K/447 K
• US 7 Year Note Auction Bid/cover 2.82. Yield Awarded 3.21 %
US DEBT REVIEW AND OUTLOOK
US Treasuries rebound in a seesaw pattern as a “Buy American” sentiment swept over stocks and fixed income after much of the week’s uncertainty regarding sovereign debt appeared to settle down. Treasuries took their data cues from a well received US 7 year note auction as bidders sought out higher yields across the entire curve, supported by the FOMC’s continued support of the current low interest rate environment for “an extended period”. Friday’s focus will likely be on 1st quarter US GDP figures which are expected to show growth ranging in the 3.5% range. If the reading is closer to 3.9% or more, recent gains in Treasuries may fade while ramping up volatility, especially in the AM session of US trading.
TECHNICALLY SPEAKING – The recent gains in Treasuries may be running out of steam as a series of lower highs appears to be forming. If resistance at 118-14 is able to hold, June 30 years could be setting up to pullback to 117-03. Upside momentum should find a hard time piercing 119-02.
US EQUITIES REVIEW AND OUTLOOK
Stocks rallied on strong earnings from the energy and consumer products sector, while a lack of fresh bad news allowed for some of the global concerns regarding the euro zone’s sovereign debt to subside. In addition, there was some upbeat information regarding employment from Germany as well as a lower than expected reading on 1st time unemployment claims in the US. These elements contributed to a revitalization of global risk tolerance as most of the major equity indices in Europe and the US posted strong gains.
Financial stocks were among the leading gainers as the initial concern regarding the SEC probe of Goldman Sachs CDO market making and trading practice subsidies. Energy stocks posted strong gains as Exxon reported strong earnings. Two notable exceptions to this upside trend were BP (British Petroleum) and Transocean (RIG) as they both are responsible for the oil platform in the Gulf of Mexico that exploded, causing the largest threat to American coastal region on environment in nearly 20 years. The sector also benefited from a weaker US dollar and new fund buying in the crude complex as the markets continue to expect world demand to grow.
Tech stocks gained, led by Apple as bargain hunters returned to seek value.
TECHNICALLY SPEAKING – June S&P futures may try to retest support at 1194.50, with a break of this level setting up a move back to 1186.50. If the current range is able to hold, the market may try for an upside test of 1219.00. Upside may be limited as the market looks towards next week’s employment data as the next major fundamental catalyst.
Majority of commodities down heavily as US dollar rallies, risk tolerance fades. Copper drops to lowest levels in a month. Wheat buck trend, posts small gain on short covering rally from oversold condition.
Prepared by Rich Roscelli & Paul Brittain.
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DATA RELEASES 04/30/10