Morning Interest Rate and Treasuries Report

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April 10th, 2012

Treasury prices have posted moderate losses this morning, as some traders feel that a slight recovery in US equities may have triggered some profit taking after the recent rally in prices. From last week’s lows to the recent high, June bonds gained roughly 4 1/2 points. With a surprising Chinese trade surplus result overnight hinting at better global economic activity, and the increase in foreign demand seen within the Chinese trade balance report potentially cushioning the Chinese economy from weaker domestic demand levels, there has been a partial easing of global economic slowing fears. It is also possible that the presence of upcoming US supply may have helped to limit the recent rise in Treasury prices, as many traders are expected to pay close attention to the 3-Year Note auction results later today. While the markets will take some direction from private weekly US chain store sales figures as well as the US Wholesale trade report, the main event of the day might be a series of speeches by Federal Reserve officials as US economic data might not be as important as any hint from the Fed of potential easing. Some traders are suggesting that yesterday’s high in June Bonds effectively priced in the weaker than expected US Non Farm payroll result at the end of last week and that the Treasury market is now looking ahead to fresh US economic data and to hints on the Fed’s current policy stance. The Treasury market might also take some direction from a private consumer confidence reading today as well.


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