ECONOMIC DATA 01/15/2009 8:30 AM US PRODUCER PRICE INDEX (-2.0%, EX FOOD ENERGY +0.1%). EMPIRE STATE MANU SURVEY (-25.0). US WEEKLY JOBLESS CLAIMS (500K). 10:00 AM PHILA FED SURVEY (-35.0) 10:30 AM EIA INVENTORY NUMBERS.
TREA SURIES RALLY AS RETAIL SALES DROP TWICE THE EXPECTED AMOUNT, REKINDLE LONG & DEEP RECESSION BELIEFS.
US Treasuries rallied as a new verse of the Recession Blues began to play for investors as a very blue (or red) Christmas season led December US retail sales to their sixth month of declines, nearly double the expected amount. The Beige Book report further supported this outlook, stating that Retail Sales were generally weak and manufacturing & services declined across the US economic landscape. US 30 years rallied over 2 basis points as long traders gained from investors scramble to lock in guaranteed higher yield. A Moody's report stated today that the prolonged economic downturn will equate into nearly 300 companies being unable to meet their debt obligations this year. This sentiment effectively threw a monkey wrench into the recent rallies in corporate debt purchases for the sake of higher yield. Risk aversion was the dominating strategy of the day. The final nail in today's Murphy's Law unfolding took place after the market closed, with the announcement that Apple CEO Steve Jobs will be taking a medical leave of absence. The blow to such a bellwether figure of the entrepreneurial world gave secure debt an even greater push in the aftermarket.
Technically, support & resistance levels have been reset with the 30 years breakout & hold over 135.00. 30 & 60 minute RSI show the market to be overbought at this level. A correction to the spike should allow for retracement back to 135.30, with additional support at 135.195. Initial resistance should be met at the 137.170 level, with a strong ceiling at 137.310.