Treasury prices dropped on Wednesday as the large amount of economic data was received with optimism, particularly on the Jobless Claims front (at 407K vs. forecast 435K). By the end of the day the Dow Jones Industrial Average reversed Tuesday’s triple digit drop and rose 150 points to close at 11,187. Consequently, the 2-year note declined 5/32 yielding 0.53%, while the 5-year lost 10/32 to yield 0.79%. The benchmark 10-year note declined one and 6/32 of a point yielding 2.91%. The 30 year bond declined one and 15/32 of a point to yield 4.27%.
Wednesday’s decline in Treasury values continued the trend of the past month. Yields have widened across the curve as improving economic data has pushed investors away from Treasuries in spite the launch of QE2. The most significant changes have been in the intermediate and long end with the 5-year note trading 27 basis points wider than a month ago. Both the 10-year note and 30-year bond are trading about 23 bps wider while the short end of the curve, already trading at record low yields, has not changed much during the same period.
Today’s absence of economic data means that Treasury prices will be highly susceptible to the performance of the equity market. In terms of volume we expect very light trading in the fixed income market as many investors extend Thursday’s holiday into the weekend and focus on next week’s economic calendar. Currently the 2-year note is trading flat yielding 0.52% while the 5-year note has gained 6/32 to yield 1.52%. Meanwhile the 10-year note is trading 11/32 higher to yield 2.86% and the long bond has recovered 28/32 yielding 4.22%.
Next week’s economic releases will give investors much more information to digest culminating with the Unemployment Report being released on Friday. Covering some key economic indicators, the economic week will start with Monday’s release of the Dallas Fed Manufacturing Activity Index for the month of November. Tuesday will bring Chicago’s Purchasing Manager Survey; analysts are expecting this report to be slightly lower than the previous month at 60.0. Also, Consumer Confidence will be released that day and is expected to improve from the previous period to 52.5. Wednesday will bring the release of the ADP Employment Change report, expected to increase to 68K for November, as well as the final release of 3Q’s Nonfarm productivity. Meanwhile Thursday’s always busy economic schedule will begin with the weekly Initial Jobless Claims report in which analysts expect the number of people filling for unemployment benefits to reach 424K. Finally November’s Nonfarm Payrolls, 145K forecast, and Unemployment Rate will be released on Friday. Analysts are expecting the jobless rate to remain at 9.60% for the period.
Wednesday’s decline in Treasury values continued the trend of the past month. Yields have widened across the curve as improving economic data has pushed investors away from Treasuries in spite the launch of QE2. The most significant changes have been in the intermediate and long end with the 5-year note trading 27 basis points wider than a month ago. Both the 10-year note and 30-year bond are trading about 23 bps wider while the short end of the curve, already trading at record low yields, has not changed much during the same period.
Today’s absence of economic data means that Treasury prices will be highly susceptible to the performance of the equity market. In terms of volume we expect very light trading in the fixed income market as many investors extend Thursday’s holiday into the weekend and focus on next week’s economic calendar. Currently the 2-year note is trading flat yielding 0.52% while the 5-year note has gained 6/32 to yield 1.52%. Meanwhile the 10-year note is trading 11/32 higher to yield 2.86% and the long bond has recovered 28/32 yielding 4.22%.
Next week’s economic releases will give investors much more information to digest culminating with the Unemployment Report being released on Friday. Covering some key economic indicators, the economic week will start with Monday’s release of the Dallas Fed Manufacturing Activity Index for the month of November. Tuesday will bring Chicago’s Purchasing Manager Survey; analysts are expecting this report to be slightly lower than the previous month at 60.0. Also, Consumer Confidence will be released that day and is expected to improve from the previous period to 52.5. Wednesday will bring the release of the ADP Employment Change report, expected to increase to 68K for November, as well as the final release of 3Q’s Nonfarm productivity. Meanwhile Thursday’s always busy economic schedule will begin with the weekly Initial Jobless Claims report in which analysts expect the number of people filling for unemployment benefits to reach 424K. Finally November’s Nonfarm Payrolls, 145K forecast, and Unemployment Rate will be released on Friday. Analysts are expecting the jobless rate to remain at 9.60% for the period.
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