The price of Treasuries rose on Wednesday as weaker than expected economic data increased demand for government paper. By the end of the day the 2-year note had risen 3/32 to yield 0.69% while the 5-year note gained 14/32 yielding 1.69%. The benchmark 10-year note increased 17/32 yielding 2.99% while the long bond improved 8/32 to yield 4.06%. The Fed Beige Book was released yesterday at 1:00pm CDT, and in another supportive factor of a slower economic recovery, the report stated that Fed districts saw modest gains in the economy, a modest improvement in labor markets but only as a result of temporary jobs and inflationary pressures remaining relatively low. “Among those Districts reporting improvements in economic activity, a number of them noted that the increases were modest… Overall labor market conditions improved modestly across the Districts, with several reports of temporary hiring. Consumer prices of goods and services held steady in most reporting Districts. Input prices also held largely steady, with only a few reports of cost increases. Wage pressures continued to be contained on the whole.” Fed Beige Book, July 28th 2010
In looking at other fixed income products, we continue to see prices of Secondary Preferreds stabilize as they have experienced strong demand in the past few weeks. On average, Qualified Dividend Income or QDI preferreds (which are mostly financials) are trading at an average price of $23.13 representing an increase of 7.54% from one month ago. On the other hand, Non-QDI preferreds which are mainly composed of Trust Preferreds and Notes have also seen a recovery, although not as sharp, during the same time frame. Non-QDIs currently have an average price of $24.97 which is a 2.25% increase versus one month prior. However, uncertainty with respect to Trust Preferreds as a result of regulatory changes to Tier 1 capital may result in added volatility to Non-QDIs in the future.
Treasury prices are reacting to this morning’s economic release with the weekly claims report showing in line with expectations reading. The 2-year Treasury note is trading flat and yielding 0.61% while the 5-year note continues its upward moving gaining 4/32 to yield 1.72%. The benchmark 10-year note is currently trading 10/32 lower to yield 3.02% while the long bond has dropped 1 point 2/32 to yield 4.12%. The Department of Labor released this morning its weekly Initial Jobless Claims report showing that first time claims were slightly lower than expected at 457,000 with analyst’s estimates of a 460,000 increase. The Continuing Claims report showed a slightly higher than expected reading at 4.565 million versus the expected 4.500 million. The more stable 4-week average number of Initial Claims again dropped close to the 450K mark at 452,500, which is a decline of 4,500 from the previous period. In other economic news, the Treasury department will auction $29 billion of a 7-year note at noon CDT. This auction will be the last of a 3 part $104 billion offering.
In looking at other fixed income products, we continue to see prices of Secondary Preferreds stabilize as they have experienced strong demand in the past few weeks. On average, Qualified Dividend Income or QDI preferreds (which are mostly financials) are trading at an average price of $23.13 representing an increase of 7.54% from one month ago. On the other hand, Non-QDI preferreds which are mainly composed of Trust Preferreds and Notes have also seen a recovery, although not as sharp, during the same time frame. Non-QDIs currently have an average price of $24.97 which is a 2.25% increase versus one month prior. However, uncertainty with respect to Trust Preferreds as a result of regulatory changes to Tier 1 capital may result in added volatility to Non-QDIs in the future.
Treasury prices are reacting to this morning’s economic release with the weekly claims report showing in line with expectations reading. The 2-year Treasury note is trading flat and yielding 0.61% while the 5-year note continues its upward moving gaining 4/32 to yield 1.72%. The benchmark 10-year note is currently trading 10/32 lower to yield 3.02% while the long bond has dropped 1 point 2/32 to yield 4.12%. The Department of Labor released this morning its weekly Initial Jobless Claims report showing that first time claims were slightly lower than expected at 457,000 with analyst’s estimates of a 460,000 increase. The Continuing Claims report showed a slightly higher than expected reading at 4.565 million versus the expected 4.500 million. The more stable 4-week average number of Initial Claims again dropped close to the 450K mark at 452,500, which is a decline of 4,500 from the previous period. In other economic news, the Treasury department will auction $29 billion of a 7-year note at noon CDT. This auction will be the last of a 3 part $104 billion offering.
Source: Bloomberg L.P. Chart by The Fixed Income Strategies Group RBC WM
No comments:
Post a Comment