Morning Interest Rate and Treasuries Report

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August 29th, 2012

The US Treasury market was trading slightly below Tuesday’s closing levels early this morning, but some traders felt that it did not seem like there was a definitive “risk-on” vibe in place in global markets. Other traders noted that there did not appear to be a marked reduction in Euro zone debt concerns overnight, as sovereign debt yields were posting mixed results. However, comments from European Central Bank President Draghi saying that the ECB will do whatever is necessary to insure price stability might have applied some minor pressure to Treasuries.

While the focus of the Treasury market is likely to shift towards the upcoming KC Fed Jackson Hole symposium, today’s focus is likely to remain on US economic data. Many traders are expecting a minor upward revision in the second quarter GDP report, as well as expecting to see a minor rise in Pending Home Sales figures. However, the market will also take note of today’s US 5-Year Note auction at mid-session that follows good demand for US 2-Year notes yesterday.

Well after the 5-year auction results have impacted Treasury prices, the market will see a Fed Beige Book release. While that information might be considered dated after the recent release of the FOMC meeting minutes, many traders will still be looking for any sign of easing from the Fed as a signpost for Fed Chairman Bernanke’s speech on Friday. It is possible that the uncertainty from Hurricane Isaac’s landfall overnight will provide some minor support to Treasury prices early today, especially since global equities have already started out with moderate losses.
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*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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