SUMMARY OF DATA 07/14/09

  •  8:30 AM- PRODUCER PRICE INDEX (0.8%, EX # 0.1%),
  •  8:30 AM -RETAIL SALES (0.5%, EX AUTO 0.6%)
  •  10:00 AM- US BUSINESS INVENTORIES (-0.8%)

US TREASURIES RETREAT AS EQUITIES RALLY LED BY FINANCIALS DAMPENS SECURITY RALLY.

US TREASURIES reversed from the recent highs on Monday after equities posted a strong rebound from overnight lows after Goldman Sachs received a strong buy recommendation based upon expectation of the leading Wall Street firm posting better than expected earnings driven by record breaking revenues from its trading activities. The sobering reality of supply once again pressured upside movement in the US fixed income sector as its budget deficit was reported as topping $1 trillion today, a record which shows little signs of slowing for the rest of 2009 as the US revenue balance continues to remain disproportionately reliant upon debt income vs. tax revenue.

Finally the acceptance of 2009 as a rebuilding year (all sports fans know the term so well) should alleviate some of the recent gains based upon fear of the uncertain. Measures of inflation and recovery will be challenging traders and investors on Tuesday as a weeklong drought of key economic data comes to an end with the release of PPI (Producers Price Index) and retail sales for June.

TECHNICAL OUTLOOK-US 30 YEARS- US 30 years appear to be setting up for a retracement, based on the return to a 38.2 percent Fibonacci level low of 119-260 in today's session. Market appears to be setting up for a step down breaking pattern that should test 118-030, with a downward target of 116-180. Resistance sets up near the overnight high of 121-080, with a break signaling additional upward momentum to 121-270.

US 10 YEARS- US 10 year notes are demonstrating a significantly overbought condition, with daily RSI coming in over 70. The overbought indications should allow for a near term pullback to 117-160 as early as this week.

EURODOLLARS- The waiting continues and the scale trade continues to form in December and March Eurodollars. Continued closings at the low end of the range should set up for an initial downward test of 99.140.

US DEBT FUTURESOPENHIGHLOWCLOSECHANGE
US U9 (US 30 YRS)120-240121-095119-260119-305-24.5/32nds
TY U9 (US 10 YRS)118-240119-000118-065118-090-13.5/32nds
ED Z9 (EURO $)99.24599.28099.18599.200-0.5
eurodollar

eurodollar
us

us t-bond 30 yr
us

us t-bond 10 yr