Bond markets continued selling off yesterday and are continuing to sell off so far in the overnight session. We're now into the high 1.6's ahead of the European open as markets digest the Bank of Japan policy announcement or lack thereof (no new policies announced, though they did note moderate improvements).
The key question for bond markets is "when will the bleeding stop," and perhaps "how bad will things get before that happens." On these points, debate and conjecture could continue indefinitely. For each technical or fundamental argument for one eventuality, there will always be a counterpoint.
With limited news on tap out of Europe overnight, the domestic scene seems like it should have a greater-than-usual impact on bond market trading. We'll get two pieces of upper-tier economic data in the 8:30 time slot with International Trade and Jobless Claims. Wholesale Inventories follows at 10am, but is the likely to be the least significant of the three.
Perhaps more significant that all of those will be the end of the Treasury auction cycle with 30yr Bonds at 1pm. Could this be the turning point for the recent weakness (assuming it doesn't arrive sooner)? Indeed that's possible, but certainly not if the 30yr Auction is anything like yesterday's 10's.
Given the volume response to yesterday's auction, today's could well set the tone and the direction heading into the weekend. 10yr yields are within striking distance of their 100 day moving average. Something they've only crossed significantly twice in the past year (once going up in March and once coming down in April).
In the current environment--one that is certainly TRENDING as opposed to drifting sideways apathetically--we're in reaction mode. If you missed yesterday's RECAP, there were some potentially useful charts intended to illustrate possibilities and help keep the big picture in mind. To be clear, we don't think the market is justified selling off here from a fundamental standpoint, but the market might not give a damn, and has been "saying" this louder and louder. We think it should stop and hope it does, but would be the first to call ourselves foolish for ruling out the possibility that it won't.
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Week Of Mon, Aug 6 2012 - Fri, Aug 10 2012 |
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|
Time |
Event |
Period |
Unit |
Forecast |
Prior |
Actual |
| Mon, Aug 6 | ||||||
| -- | No Significant Scheduled Data | -- | -- | -- | -- | -- |
| Tue, Aug 7 | ||||||
| 13:00 | 3-Yr Note Auction | -- | bl | 32.0 | -- | -- |
| 15:00 | Consumer credit | Jun | bl | 12.00 | 17.12 | -- |
| Wed, Aug 8 | ||||||
| 07:00 | Mortgage market index | w/e | -- | -- | 945.7 | -- |
| 07:00 | MBA Purchase Index | w/e | -- | -- | 182.0 | -- |
| 07:00 | Mortgage refinance index | w/e | -- | -- | 5452.8 | -- |
| 07:00 | MBA 30-yr mortgage rate | w/e | % | -- | 3.75 | -- |
| 08:30 | Productivity Revised | Q2 | % | 1.4 | -0.9 | -- |
| 08:30 | Labor costs Revised | Q2 | % | 0.5 | 1.3 | -- |
| 13:00 | 10-yr Note Auction |
-- | bl | 24.0 | -- | -- |
| Thu, Aug 9 | ||||||
| 08:30 | Continued jobless claims | w/e | ml | 3.270 | 3.272 | -- |
| 08:30 | Initial Jobless Claims | w/e | k | 370 | 365 | -- |
| 08:30 | International trade mm $ | Jun | bl | -47.4 | -48.7 | -- |
| 10:00 | Wholesale inventories mm | Jun | % | 0.3 | 0.3 | -- |
| 10:00 | Wholesale sales mm | Jun | % | 0.2 | -0.8 | -- |
| 13:00 | 30-Yr Bond Auction | -- | bl | 16.0 | -- | -- |
| Fri, Aug 10 | ||||||
| 08:30 | Import prices mm | Jul | % | 0.0 | -2.7 | -- |
| 08:30 | Export prices mm | Jul | % | -0.1 | -1.7 | -- |
| 14:00 | Federal budget, $ | Jul | bl | -- | -- | -- |
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* mm: monthly | yy: annual | qq: quarterly | "w/e" in "period" column indicates a weekly report * Q1: First Quarter | Adv: Advance Release | Pre: Preliminary Release | Fin: Final Release * (n)SA: (non) Seasonally Adjusted * PMI: "Purchasing Managers Index" |
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