ECONOMIC DATA 02/26/2009: all times EST. 8:30 AM: US DURABLE GOODS (-2.5%), US WEEKLY JOBLESS CLAIMS (625 K). 10: 00 AM US NEW HOME SALES (330 K), 10:35AM EIA INVENTORY (NAT GAS)
RESULTS FROM 02/25/09
US EXISTING HOME SALES - (4.49 M VS. EXP 4.8 M), EIA INVENTORY REPORTS (+0.7 M CRUDE,-3.1 M RBOB. REFINERY UTILIZATION- 81.4%. US 5 YEAR NOTE AUCTION ($32 B, YIELD 1.985 %, B/C 2.21)
US TREASURIES FALL DESPITE EQUITY VOLATILITY AS RESULTS OF 5 YEAR NOT AUCTION OFFER HIGHER THAN EXPECTED YIELD TO MOVE DEBT.
US Treasuries fell in Wednesday's session, after the results of the government's sale of $32 billion of five year notes, the debt instruments considered to be on the long end of the recession /recovery curve, were sold with a higher than expected yield. The disappointing results renewed concerns regarding the record levels of debt supply expected to be offered to the marketplace in order to support the bailout & recovery programs that will hopefully restart the US & global economies that are struggling with the worst economic downturn in several generations.
Treasury debt first came under scrutiny during the European session when it was announced that S&P had downgraded Ukraine's government debt to a CCC- rating. As the session wore on & equities appeared to be holding above support levels, even after a dismal existing home sales report was released, traders & investors turned their focus from security to supply issues , resulting in a selloff across the yield curve. Concerns regarding the results of Thursday's auction of the reintroduced 7 year note also pressured Treasuries. It appears that trading futures for higher yield is a far different cry from actually moving the product to long term holders, who appear increasingly concerned with regards to longer term inflation and the opportunity costs involved in holding low yielding, taxable government income for extended periods of time.
Technically, March 30 year futures should fill in a gap left from the 126.26 level before being able to move down to retest the 125.02 level. A move below this level could set up for a move to the 123.010.
US DEBT FUTURES
US H9 (US 30 YRS)
TY H9 (US 10 YRS)