US TREASURY FUTURES REPORT 01/26/2009
ECONOMIC DATA 01/27/2009: FOMC MEETING BEGINS. 10:00 AM- US CONSUMER CONFIDENCE (39.0)
TREASURIES FALL AFTER BETTER THAN EXPECTED HOUSING DATA, REBIUND IN EQUITIES.
US Treasuries fell as a rally in equities dampened demand for fixed income debt and the long end of the yield curve came under additional selling pressure as the first Treasury auction of the week resulted in a higher yield than expected. The short end of the curve also fell as reports on existing home sales and leading indicators resulted in surprise gains. Traders & Investors sold off 30 year futures down to significantly oversold conditions as the perception grows that supply issues will allow for better bargains in US Treasury Debt.
Monday's kickoff (Yes, Super Bowl is coming) of US Debt auctions began with an $8 billion offering of twenty (20) year TIPS (Treasury Index Protected Securities). The results were somewhat soft as the bonds drew a higher than expected yield of 2.50% with a bid to cover of 1.92. The expectation based on recent auctions was for a yield of 2.37% with a bid to cover of 1.98. (Bid to cover ratio is a measure of the number of bids divided by the number of bids accepted). An apparent weakened demand for long term debt designed to combat inflation, one of the significant results of oversupply would be expected to pressure long term debt that lacks this value erosion protection. Tuesday, the Treasury plans to offer $40 billion of 2 year notes and January 29th will be a $30 billion auction of US 5 year notes.
Technically, the 30 year market has reached & twice tested the key support level of 128.16. At this level, 30 & 60 min RSI shows the market approaching an oversold condition. The bounce from this area should result in a retracement to the 129.26 level, with significant resistance at 130.26. Further upward momentum beyond 132.00 could signify that the current downward trend may be poised for a reversal. Failure to break initial resistance should allow for downward momentum to break the 128.12 level and a set up to test 126.19.
US DEBT FUTURES OPEN HIGH LOW CLOSE CHANGE
US H9 (US 30 YRS) 129.060 129.230 128.220 129.075 -12/32nds
TY H9 (US 10 YRS) 123.150 123.300 123.070 123.210 -8/32nds