Morning Interest Rate and Treasuries Report

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April 19th, 2012

US Treasury Bond prices are coming into this morning’s session roughly 1 point under their recent highs, although some traders feel that the market has generally held up fairly well given a notable improvement in overall global macro economic sentiment. Treasury prices have come under additional pressure after a positive initial reaction to this morning’s Spanish longer-term debt auction. However, other traders feel that this morning’s results will not fully diminish European debt concerns. Other developments during the overnight session that may have weakened US Treasuries are reports that that the Chinese may be poised to introduce fresh easing measures, and news from American Express that they saw an increase in consumer spending. With US equity markets showing early strength today, global financial markets may be in a better position to embrace positive economic news. Expectations call for a minor decline US Initial Jobless Claims, and a minor improvement with Existing Home Sales, although the Philly Fed’s business sentiment is widely expected to decline. US corporate earnings news has generally remained positive, which may have been confirmed by signs of a higher opening for Wall Street later today. With the S&P futures holding onto early gains this morning, economic sentiment appears to be mostly upbeat but some traders feel that Treasury prices will be unable to move sharply in either direction unless there are clear signs of growth in news headlines this morning. At least part of the gains for Treasuries earlier this week may have been the result of market anxiety toward this morning’s Spanish auction but many traders think the auction results were good enough to diminish flight-to-safety support from Euro zone debt problems.

*Disclaimer: The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed therein constitutes a solicitation of the purchase or sale of any futures or options contracts.

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