Updated: 05-01-2015

The Market at 03:35PM ET
10-Year: -23/32…2.12…
EUR/USD: 1.1199…
USD/JPY: 120.22…

Moving the Market

-- Cleveland Fed President Mester (non-FOMC voter and hawk) speaks on 'Issues in Consumer Credit': Better household finances are helping to support U.S. economy

-- April ISM Index: Actual 51.5, Briefing.com consensus 51.9, Prior 51.5

-- March Construction Spending: Actual -0.6%, Briefing.com consensus 0.4%, Prior +1.0% (revised from-0.1%)

-- April Michigan Sentiment - Final: Actual 95.9, Briefing.com consensus 96.0, Prior 95.9

-- San Francisco Fed Williams (FOMC voter) speaks on 'Monetary Policy in Financial Markets; Is There a New Paradigm?' (15:45 ET)

-- April Auto and Truck Sales (17:00 ET): Prior 5.4M and 8.2M

03:35PM ET
Yields Continue Higher

  • Treasuries traded lower today, with heavy losses taken by 5's, 10's, and 30's
  • Yield check (weekly change in parenthesis):
    • 2-yr: +3 bps to 0.60% (+9 bps)
    • 5-yr: +8 bps to 1.50% (+18 bps)
    • 10-yr: +8 bps to 2.11% (+19 bps)
    • 30-yr: +8 bps to 2.82% (+21 bps)
  • News:
    • The ISM Manufacturing Index was unchanged and remained at 51.5 in April. The Briefing.com Consensus expected the ISM Manufacturing Index to increase to 51.9
      • The Production Index increased to 56.0 in April from 53.8 in March. The New Orders Index increased to 53.5 from 51.8
      • Construction spending declined 0.6% in March after increasing an upwardly revised 0.1% (from -0.1%) in February. The Briefing.com Consensus expected construction spending to increase 0.4%. Private construction spending increased 0.3% in March after declining 0.3% in February
    • The University of Michigan Consumer Sentiment Index was unrevised in the final April reading. Sentiment rose from 93.0 in March to 95.9 in April. The Briefing.com Consensus expected the Consumer Sentiment Index to be revised up to 96.0
  • Commodities:
    • WTI Crude fell 0.47% to $59.35/bbl, but had traded as low as $58.32/bbl
    • Gold fell 0.65% to $1,174.70/troy oz.
    • Copper rallied 1.54% to $2.931/lb.
  • Currencies:
    • EUR/USD: -0.14% $1.1199
    • USD/JPY: +0.64% to 120.22    
  • Week Ahead: 
    • Monday: Boston Fed President Rosengren (non-FOMC voter) (09:00 ET); Fed Governor Tarullo (FOMC voter)(09:00 ET or later); March Factory Orders (10:00 ET); Chicago Fed President Evans (FOMC voter) speaks on current economic conditions and monetary policy (12:25ET); San Francisco Fed President Williams (FOMC voter) speaks in San Francisco on "Creating Jobs and Economic Opportunity through Small Business" (15:10 ET) 
    • Tuesday: March Trade Balance (08:30 ET); April ISM Services (10:00 ET); Minneapolis Fed President Kocherlakota (non-FOMC voter) (20:00 ET)
    • Wednesday: MBA Mortgage Index for the week ending 05/02 (07:00 ET); April ADP Employment Change (08:15 ET); Q1 Productivity - Preliminary (08:30 ET); Q1 United Labor Costs -- Preliminary (08:30 ET); Fed Chair Yellen speaks on "Finance and Society" (09:15 ET); Crude Inventories for the week ending 05/02 (10:30 ET); Kansas City Fed President George (non-FOMC voter) participates in "Credit Markets: Booms, Busts and Distortions" panel (13:15 ET); Atlanta Fed President Lockhart (FOMC voter) speaks on the economic outlook and monetary policy (13:30 ET)
    • Thursday: April Challenger Job Cuts (07:30 ET); Initial Jobless Claims for the week 05/02 and Continuing Jobless Claims for the week ending 04/25 (08:30 ET); Natural Gas Inventories for the week ending 05/02 (10:30 ET); March Consumer Credit (15:00 ET)
    • Friday: April Employment Situation Report (08:30 ET); March Wholesale Inventories (10:00 ET)

10-Yr: -23/32… EUR/USD: 1.1199… USD/JPY: 120.22…

02:31PM ET
Dollar Gains for First Day in Eight

  • The dollar gained against all of the majors today as the market rebounded from a very tough week
  • News flow was slow as the May Day holiday kept many foreign markets closed
    • The U.S. Dollar Index rallied 0.65% to 95.22, despite weaker-than-expected ISM and Construction Spending data
      • The key production and order readings of the ISM Index did show improvement
  • EUR/USD fell 0.19% to $1.1195
  • GBP/USD fell 1.36% to $1.51.45
    • The U.K.'s Manufacturing PMI was 51.9 in April, worse than both expectations and the 54.0 in March
  • AUD/USD fell 0.91% to $0.7830
  • NZD/USD -1.05% to 0.7528
  • USD/JPY rallied 0.67% to 120.25

10-Yr: -21/32… EUR/USD: 1.1202… USD/JPY: 120.22…

01:00PM ET
Treasuries Remain Deep in Red

  • The sell-off in government notes and bonds continues. Liquidity may be thinner due to the holiday, but this has been the trend all week so that is not much of an excuse
  • The U.S. data today was worse than what the market expected, on balance, but this hasn't generated demand for Treasuries
  • Yield check:
    • 2-yr: +2 bps to 0.60%
    • 5-yr: +7 bps to 1.50%
    • 10-yr: +8 bps to 2.12%
    • 30-yr: +9 bps to 2.83%
  • The market is quite oversold at this point, but the possibility of trading 2.40% in the 10-year over the next several months no longer seems absurd
  • 10-Year Daily Yield:

10-Yr: -24/32… EUR/USD: 1.1180… USD/JPY: 120.28…

11:56AM ET
Dollar Breaks Losing Streak

  • The U.S. Dollar Index rose 0.69% to 95.26 in what was likely profit-taking on a strong move down in the dollar this week. As we have mentioned before, there is also the uptrend of the rally that began in the summer of 2014 which may be providing support
  • The pound sterling fell on the release of April's Manufacturing PMI, which came in worse than expected at 51.9, versus 54.0 in March
    • GBP/USD: -1.41% to $1.5138
  • The data for the U.S. economy was also worse than expected, with the April ISM missing estimates at 51.5 versus the Briefing.com consensus of 51.9
    • March Construction Spending fell a worse-than-expected 0.6% versus +0.4% in February
  • There was little news globally because of the May Day holiday
  • USD/JPY: +0.61% to 120.183
  • EUR/USD: -0.12% to $1.1200
  • USD/CAD: +0.83% to 1.2178
  • USD/CHF: unch at 0.9331
  • AUD/USD: -1.15% to $0.7815
  • NZD/USD: -1.15% to $0.7520

10-Yr: -20/32… EUR/USD: 1.1200… USD/JPY: 120.18…

11:22AM ET
Major Downtrends Appear Broken

  • While 10 and 30-years appear very oversold over the past week, their longer-term technical pictures have deteriorated. Since both of these yields found resistance at their downtrends on Wednesday, we will take those levels to have significance, and the fact that both yields found those levels as support this morning means that more downside is opened up for 10's and 30's prices. For those who watch moving averages, both yields are within striking distance of their 200-day MA's
  • Yield check:
    • 2-yr: +2 bps to 0.60%
    • 5-yr: +6 bps to 1.49%
    • 10-yr: +7 bps to 2.10%
    • 30-yr: +7 bps to 2.81%
  • 10-Year Yield Daily

  • 30-Year Yield Daily

10-Yr: -19/32… EUR/USD: 1.1192… USD/JPY: 120.22…

10:27AM ET
Treasuries Drop

  • The 30-year bond yield is hitting its highest level since March 9th, after worse-than-expected data failed to turn the market higher. The 2-year note has finally found some selling interest
  • The ISM Manufacturing Index was unchanged and remained at 51.5 in April. The Briefing.com Consensus expected the ISM Manufacturing Index to increase to 51.9
    • The key production and order readings showed improvement
    • The only real disappointing reading was the Employment Index, which slipped into a contraction in April. The related index fell to 48.3 from 50.0
  • Construction Spending fell 0.6% in March vs. the Briefing.com consensus of 0.4%
  • The final reading of Michigan Sentiment in April was 95.9, less than the Briefing.com consensus of 96.0 and equal to the prior reading of 95.9
  • Yield check:
    • 2-yr: +4 bps to 0.61%
    • 5-yr: +7 bps to 1.50%
    • 10-yr: +7 bps to 2.10%
    • 30-yr:  +7 bps to 2.82%

10-Yr: -19/32… EUR/USD: 1.1218… USD/JPY: 120.12…

09:27AM ET
Treasury Complex Weakens as Stocks Set for Higher Open

  • Governments are weakening with only the 2-year avoiding substantial losses before the equity open
  • Yield check:
    • 2-yr: +1 bp to 0.58%
    • 5-yr: +4 bps to 1.47%
    • 10-yr: +5 bps to 2.08%
    • 30-yr: +5 bps to 2.79%
  • Gillian Tett of the Financial Times continues the steady drumbeat of warnings about low liquidity in bond markets
  • WTI Crude is down 0.84% to $59.13/bbl
  • The U.S. Dollar Index is up 0.18% to 94.78
  • Gold is down 0.98% to $1,170.9/troy oz.

10-Yr: -12/32… EUR/USD: 1.1261… USD/JPY: 119.94…

08:13AM ET
Treasuries Weaker Before Open

  • Wednesday's preliminary estimate for Q1 2015 GDP was a surprise to many economists, but not to the Federal Reserve Bank of Atlanta. Its GDPNow model had forecast the real growth rate of the U.S. economy at 0.1%, just shy of the actual value (0.2%). The Briefing.com consensus estimate was 1.0%
    • The model is predicting Q2 growth of +0.9%, although it is extrapolating from limited data (and Q2 is only 1/3 over)
  • Treasuries are softer but off of their lows as the market awaits the first Fed speaker since the pre-FOMC meeting quiet period began
    • Cleveland Fed President Mester will speak at 08:30 ET. She is 80% hawkish according to Deutsche Bank chief economist Joseph LaVorgna and a non-FOMC voter
  • Yield check:
    • 2-yr: unch at 0.57%
    • 5-yr: +3 bps to 1.46%
    • 10-yr: +3 bps to 2.07%
    • 30-yr: +3 bps to 2.77%
  • Liquidity may be limited today due to the May Day holiday, with most country's financial markets closed
    • The timing is poor at the end of a volatile week in Treasuries, the Nasdaq, and the Russell 2000
  • European bond markets are closed

10-Yr: -9/32… EUR/USD: 1.1257… USD/JPY: 119.79…

07:05AM ET
Treasuries Slip

  • Government notes and bonds fell overnight despite an aggressive flight to quality Thursday afternoon that was induced by sharp equity declines
  • Yield check:
    • 2-yr: +2 bps to 0.59%
    • 5-yr: +4 bps to 1.46%
    • 10-yr: +4 bps to 2.07%
    • 30-yr: +4 bps to 2.78%
  • International News:
    • Most countries had market holidays for May Day
    • The U.K.'s Manufacturing PMI for April fell short of expectations at 51.9, lower than the 54.0 for March
  • Data Out Today:
    • April ISM Index (10:00 ET)
    • March Construction Spending (10:00 ET)
    • April Michigan Sentiment -- Final (10:00 ET)
    • April Auto and Truck Sales (17:00 ET)
  • Fed Speak:
    • Cleveland Fed President Mester speaks on "Issues in Consumer Credit" (08:30 ET)
    • San Francisco Fed Williams speaks on "Monetary Policy in Financial Markets: Is There a New Paradigm?" (15:45 ET)

10-Yr: -10/32… EUR/USD: 1.1270… USD/JPY: 119.81…

03:35PM ET
Treasuries Reverse Losses in Flight To Quality

  • Accelerating equity selling after 2:00 ET stimulated buyers for government notes and bonds today, eliminating earlier losses and putting 10's and 30's back above significant technical levels. Ironically, the losses in equities seem to have been triggered by moves higher in U.S. and European interest rates over the past week
  • Yield check:
    • 2-yr: unch at 0.56%
    • 5-yr: +1 bp to 1.43%
    • 10-yr: -1 bp to 2.04%
    • 30-yr: -1 bp to 2.74%
  • News:
    • Initial Jobless Claims declined to 262,000 for the week ending April 25 from an upwardly revised 296,000 (from 295,000) for the week ending April 18. The Briefing.com Consensus expected the Initial Claims level to decline to 290,000
      • That was the lowest Initial Claims number since April 2000. The four-week moving average is holding at 15-year lows. Layoff activities have clearly improved
      • The Continuing Claims level declined to 2.253 mln for the week ending April 18 from an upwardly revised 2.327 mln (from 2.325 mln) for the week ending April 11. The consensus expected Continuing Claims to decrease to 2.318 mln
    • The Employment Cost Index increased 0.7% in Q1 2015 after increasing a downwardly revised 0.5% (from 0.6%) in Q4 2014. The Briefing.com Consensus expected employment costs to increase 0.6%
      • Wages and salaries increased 0.7% in the first quarter, up from a 0.6% increase in Q4 2014. Benefits spending growth held steady at 0.6%
    • The Chicago PMI increased to 52.3 in April from 46.3 in March. The Briefing.com Consensus expected the Chicago PMI to increase to 50.0
    • At the lows of the day, the 30-year yield traded 2.815% and the 10-year yield was 2.112%. The 5-year yield hit 1.507%
  • Commodities:
    • WTI Crude: +1.67% to $59.53/bbl
    • Gold: -2.40% to $1180.9/troy oz.
    • Copper: +2.72% to $2.875/lb.
  • Currencies:
    • EUR/USD: +0.98% to $1.1226
    • USD/JPY: +0.34% to 119.42
  • Data Out Friday:
    • April ISM Index (10:00 ET)
    • March Construction Spending (10:00 ET)
    • April Michigan Sentiment - Final (10:00 ET)
    • April Auto and Truck Sales (17:00 ET)
  • Fed Speakers:
    • Cleveland Fed President Mester speaks on 'Issues in Consumer Credit' (08:30 ET)
    • San Francisco Fed Williams speaks on 'Monetary Policy in Financial Markets; Is There a New Paradigm?' (15:45 ET)

10-Yr: +1/32… EUR/USD: 1.1226… USD/JPY: 119.42…

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