SUMMARY OF DATA 08/27/09

  • 8:30 AM US PERSONAL INCOME AND OUTLAYS (0.1%, CONSUMER SPENDING 0.3%)
  • 9:55 AM UNIVERSITY OF MICH CONSUMER SENTIMENT (64.0) 

DATA RESULTS 08/26/09

  • US GDP (-1.0% vs. -1.5%, US WEEKLY JOBLESS CLAIMS (570 K vs.565 K).
  • EIA INVENTORY REPORT (NATURAL GAS +54 BCF)
  • US 7 YEAR NOTE AUCTION ($28 B BID TO COVER 2.74, YIELD 3.092%)

US DEBT REVIEW AND OUTLOOK

US TREASURIES completed a mixed session on Thursday. The final Treasury auction of the week ($28 Billion of US 7 year notes) was well received with a strong bid to cover and lower than expected yield. The strong demand for US debt at these relatively low yields seems to highlight the financial communities concern regarding sustainability of the economic recovery. Foreign institutions have been particularly strong buyers on the strong end of the yield curve.

Gains in Treasuries eroded later in the session as equities rebounded from early losses. Stocks rallied on news from Boeing that the aircraft manufacturer will have the maiden flight of its anticipated 787 Dreamliner aircraft sometime in 2009. Financials led the turnaround in equities. Summer sentiment remains in play with swings in the market achieved by relatively low volumes and lack of direction as financials & equities continued to range trade in search of direction. Support for Treasuries appears to be huddling under the umbrella of buying for a rainy day. This could be why the longer end of the yield curve remains attractive, so that potential return of gains in equities and other risk tolerant assets will have a yield cushion of support.

Technically, Sept US 30 year appears to be on track to test key support level of 119-170. Break of this level should put the contract near a 50 level on daily RSI indicator, which should allow for additional downward pressure to test 118-080, with a near term target of 117-080 possibly setting up by mid September.

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US EQUITY REVIEW AND OUTLOOK

US EQUITIES staged a wild swing fest on Thursday as the early retreat in stocks reverses course in the late session after key technical support levels were not breached and buyer sentiment turned positive on happy news from Boeing regarding the initial flight of its highly anticipated Dream Liner aircraft. Energy and Financial stocks were the primary drivers behind the turnaround. Energy stocks rallied after an early breech of the $70.00 level in crude failed to hold, prompting covering of shorts on relatively light volume, resulting in some buy stops being run (remember the summer Thursday running of the stops in the energy complex) Financials also offered support as Citigroup traded over $5.00 for the first time in a nearly a year on reports of strong buying from hedge funds and AIG jumped over 30% on positive comments from the new CEO of the insurance giant.  

Technically, Sept S&P futures traded in a widening channel today. The contract appears to be trying to establish a series of lower lows after failing to break through key resistance level of 1042.00. The chart pattern suggests that the market could try for another downward pullback to test key support at 1008.00. If this level is breeched, look for a move down to 1001.05. If this holds, look for this to be the bottom end of a new range channel that should recover initially back to 1012.00. Breakout resistance level for the contract remains at 1042.00

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US DEBT FUTURES

OPEN

HIGH

LOW

CLOSE

CHANGE

US U9 (US 30 YRS)

120-265

121-070

120-000

120-095

-16.5/32nds

SP U9 (S&P 500)

1029.30

1026.00

1032.50

1015.00

+2.50