ALARON US TREASURY FUTURES REPORT 04/14/2009

ECONOMIC DATA 04/15/2009: all times EST

  • 8:30 AM-US CONSUMER PRICE INDEX (0.2% EX FOOD/ENERG 0.2%), EMPIRE STATE MANU INDEX (-34.0)
  • 9:15 AM US INDUSTRIAL PRODUCTION (-0.8%)
  • 10:30 AM EIA INVENTORY (OIL, PRODUCTS)
  • 1:00 PM HOUSING MARKET INDEX

SUMMARY OF DATA

04/14/09 US PPI (-1.2% VS 0.3%), US RETAIL SALES (-1.1% VS 0.3%), US BUSINESS INVENTORIES (-1.3% VS -1.0%)

US TREASURIES RALLY FOR SECOND SESSION. RETAIL SALES DATA, PPI RENEW INFLATION CONCERNS. FEDERAL RESERVE PURCHASES $7.3 BILLION OF TREASURIES, 2ND OF 3 PURCHASES FOR WEEK.

US Treasuries rallied for a 2nd session after disappointing US retail sales data and a greater drop in Producers prices weighed on recent optimism regarding improvements in the global economic outlook. US retail sales had been expected to post a gain of 0.3% in March. A significant drop in US auto sales drove the reading to -1.2%. This reminder of continuing recessionary pressures combined with a better than expected reading on inflation offered an ideal scenario for purchasers of fixed income.

Buyers also took the opportunity to buy after the Federal Reserve completed the second of three purchases of Treasury Debt this week. The central bank purchased $7.3 billion of US 4 and 7 year obligations. Since announcing its intentions to buy Treasury Debt as a means of supporting lending activity, the Federal Reserve has purchased $51.7 billion of its intended $300 billion. While these purchases are relatively small in contrast to the total amount of debt transactions throughout the world, it does pose questions regarding the pace of purchases and what will happen to the US Treasury market if and when the Federal Reserve reaches its purchase target. The security of Treasuries also gained favor as financials pulled back ahead of earnings releases from Citigroup and Bank of America, as well as an announcement by Goldman Sachs that the company would be issuing $5 billion of stock in order to finance repayment of the funds it borrowed through the TARP programs. The market appears to be finding some concern with this strategy due to its potential for diluting value of share prices across the entire financial sector.

Technically, June 30 years continue to trade within their range. Recent upward movement should find initial resistance at 128.270. A break of this level should offer a setup to test 130.040. Support for the market sets up at 126.030, with 125.120 remaining a key support level.

US DEBT FUTURES

OPEN

HIGH

LOW

CLOSE

CHANGE

US M9 (US 30 YRS)

127.030

127.315

126.135

127.210

+18.0/32nds

TY M9 (US 10 YRS)

123.015

123.230

122.280

123.190

15.5/32nds

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Prepared by Rich Roscelli & Paul Brittain.

Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Alaron Trading Corp. its officers and directors may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.