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We have a good amount of economic data this week. The primary focus will be the FOMC’s rate decision scheduled for tomorrow at 1:15 p.m. CT. The FOMC has been referencing "contained inflation expectations" in their official statements. As far as the consumer goes, these expectations are on the rise. The Univ. of Michigan consumer confidence report’s reading on inflation expectations took a large increase in the March survey. With the March FOMC announcement scheduled for tomorrow, it will be interesting to see if this rise is addressed. There will also be attention given to the consumer and producer price indices for February. We will get regional manufacturing reports from the New York Fed and the Philadelphia Fed. There has been great strength in manufacturing, and we would expect the sentiment to continue to reflect that. Industrial production and capacity utilization will also be released. The National Association of Home Builders will report on homebuilder sentiment which may tick higher on an increase in recent sales. We will also see the number of housing starts and building permits for February.
Treasuries have carved out further gains today following the disaster in Japan. We have stuck to a mostly bullish outlook as the market continues to the upside, but today we have seen buyers from last Wednesday and Thursday head for the exit sign as those purchases were not strongly reinforced. Last Wednesday’s post-auction buying laid some groundwork for a rally and was in fact confirmed by Thursday’s gains. Bulls didn’t completely give up on Friday, but today’s action makes us think that buyers have decided to pull back on the reigns a little, mostly due to the fact that this market is not rallying like it should following the end of last week’s events. That doesn’t rule out higher prices and better rates, just that it will take fresh reasons for these gains to extend. Fresh buyers in the market are needed at this point. Bullish signals on dailies point to a test of the 120-27 level (roughly 3.26%). Upward momentum may begin to increase if the market can push through that level. With a close above 120-02 today, our chances are good that this market still have some upside potential within the near term. 10yr is currently trading 3.35%, along with mortgage backs up 6 ticks in the lower coupons.
source:
Joe Webb
VP, Trading/Pipeline Management
PrimeLending, A PlainsCapital Company
We have a good amount of economic data this week. The primary focus will be the FOMC’s rate decision scheduled for tomorrow at 1:15 p.m. CT. The FOMC has been referencing "contained inflation expectations" in their official statements. As far as the consumer goes, these expectations are on the rise. The Univ. of Michigan consumer confidence report’s reading on inflation expectations took a large increase in the March survey. With the March FOMC announcement scheduled for tomorrow, it will be interesting to see if this rise is addressed. There will also be attention given to the consumer and producer price indices for February. We will get regional manufacturing reports from the New York Fed and the Philadelphia Fed. There has been great strength in manufacturing, and we would expect the sentiment to continue to reflect that. Industrial production and capacity utilization will also be released. The National Association of Home Builders will report on homebuilder sentiment which may tick higher on an increase in recent sales. We will also see the number of housing starts and building permits for February.
Treasuries have carved out further gains today following the disaster in Japan. We have stuck to a mostly bullish outlook as the market continues to the upside, but today we have seen buyers from last Wednesday and Thursday head for the exit sign as those purchases were not strongly reinforced. Last Wednesday’s post-auction buying laid some groundwork for a rally and was in fact confirmed by Thursday’s gains. Bulls didn’t completely give up on Friday, but today’s action makes us think that buyers have decided to pull back on the reigns a little, mostly due to the fact that this market is not rallying like it should following the end of last week’s events. That doesn’t rule out higher prices and better rates, just that it will take fresh reasons for these gains to extend. Fresh buyers in the market are needed at this point. Bullish signals on dailies point to a test of the 120-27 level (roughly 3.26%). Upward momentum may begin to increase if the market can push through that level. With a close above 120-02 today, our chances are good that this market still have some upside potential within the near term. 10yr is currently trading 3.35%, along with mortgage backs up 6 ticks in the lower coupons.
source:
Joe Webb
VP, Trading/Pipeline Management
PrimeLending, A PlainsCapital Company
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