Morning Interest Rate and Treasuries Report

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April 3rd, 2012

Treasury prices have produced moderate gains this morning, although prices remain in the middle portion of their recent trading range. The Treasury market has shown two sided volatility this week but at times yesterday, the Treasury market was able to produce gains in spite of noted strength in US equities. Some traders feel that Bonds and Notes found benefit from beginning of quarter re-allocations, while other traders think that the end of quarter selloff in Treasuries may have been overdone and part of yesterday’s strength was due to technically-based short covering. In looking forward, the Treasury market can expect to see a rather active flow of economic news today as well as some fresh clarity on the direction of upcoming Federal Reserve policy. During the early portion of today’s trading, the markets generally expect to see a positive US Factory Order release but that news will be preceded by weekly chain store sales figures and a private survey of New York area manufacturing. There could be some market direction received from statements by the US Treasury Secretary, who will be presiding over the Financial Stability Oversight Council meeting. However, the big event of the Tuesday US trading session is likely to be the release of the FOMC meeting minutes from the March 13th Fed meeting. Many traders in the physical commodity markets are looking for some hint of fresh easing measures from the FOMC meeting minutes, especially after the Fed recently suggested that the US economy wasn’t strong enough yet to lower the stubbornly high US unemployment rate. At least two Fed officials this week have suggested that they are currently opposed to additional easing, but traders must realize that the meeting minutes released today will be only be impacted by events prior to March 13th. Another potential market-moving force today will be the release of US auto sales figures, which some analysts think will come in softer than the prior month. Some economists have also suggested that the truck sales figures in today’s report could be very important, as that sales sector can sometimes give insight into the status of contractors and overall construction activity.

 
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