Closing Bond Summary/Week Ahead
Analyst: Pat O'Hare
The Week Ahead
- At the cash close, yields across the Treasury curve were unchanged
- 2-yr note yield 0.39%
- 5-yr note yield 1.49%
- 10-yr note yield 2.27%
- 30-yr bond yield 3.04%
- Yields had been lower earlier in the session, bolstered by pre-open reports indicating new home prices in China declined 1.3% year-over-year and that a doctor in New York City tested positive for Ebola after returning from aid work in Guinea
- A weaker than expected New Home Sales report in the U.S. also lent the market some early support
- September new home sales increased 0.2% to 467,000 (Briefing.com consensus 475,00) from a downwardly revised 466,000 in August (from 504,000)
- New home prices declined 4.0% year-over-year to $259,000 -- the first decline since April and the largest decline since a 7.7% drop in January 2012
- Early buying interest faded, however, as stocks found their footing and gained momentum on a headline from the NIH confirming Dallas nurse Nina Pham is free of the Ebola virus
- During a bout of selling, the 10-yr note would not break out above 2.300% resistance
- The 2-yr note tested resistance in the 0.40% area, but renewed buying interest knocked it back below levels that were last seen in early June
- The U.S Dollar Index was down 0.2% to 85.71 as the greenback lost some modest ground against the yen and the euro
- Modest strength in the euro belied concerns about the bank stress test results that will be released by the ECB on Sunday
- Press reports, citing people familiar with the matter, suggested that as many as 25 banks will fail the stress test
- Commodities were mixed
- Oil -1.1% to $81.21/bbl
- Gold +0.1% to $1230.40/troy ounce
- Copper unch at $3.04/lb
- Monday's data is limited to pending home sales (10). Attention will also be paid to the results of the ECB bank stress test and the Brazilian election.
- Tuesday will see durable orders (8:30), Case-Shiller 20-city Index (9), and consumer confidence (10). Treasury will auction $29 bln 2Y notes.
- Wednesday will see just the weekly MBA Mortgage Index (7). The FOMC will announce its latest policy decisions (14). Treasury will hold a $35 bln 5Y note auction.
- Thursday's data includes initial and continuing claims and GDP-Adv. (8:30). Treasury will auction $29 bln 7Y notes.
- Friday's data is heavy as personal income and spending, PCE Prices -- Core, Employment Cost Index (8:30), Chicago PMI (9:45), and Michigan Sentiment -- Final (9:55) are all due out.