Morning Interest Rate and Treasuries Report

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August 3rd, 2012

Treasuries have started out on a marginally weaker track this morning, as the spin from the ECB statements on Thursday have somehow offered up a minor wave of improved sentiment overnight. It is also possible that generally positive global equity market action overnight and surprisingly up beat scheduled data from the Euro zone have contributed to the initial downward bias in Treasury prices today. It is also likely that anticipation of this morning’s US non farm payroll report is pressuring Treasuries prices, especially after the quasi upside breakout on the charts at times during the Thursday trade. Part of the early losses today might be technically inspired after a short term overbought condition yesterday but some of the weakness today is probably the result of fears that the US Payrolls might actually show something positive on the US economic front. Some players suggest that the Fed decided to stand pat this week, because they had the advantage of inside information on this morning’s monthly jobs figures. Apparently news of an increase in foreign central bank holdings of US Treasuries wasn’t capable of checking up the slide in Treasury prices overnight, but given the added news of better than expected Euro zone retail sales readings, the bear camp clearly had the edge from the overnight news flow. The market is probably centered on a non farm payroll gain around +95,000 to +100,000, but the ADP estimate from early in the week might have left the whisper number in the Treasury market slightly higher and in a +100,000 to +110,000 zone. Some traders think a surprise from the report today will come from the unemployment rate, or from the minutia of figures like average work week. In the end, seeing a slight positive track in all things Euro to start today could mean that a soft US reading might carry less influence while a slightly better than expected reading might be fully embraced.
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