By Maulik Mody – Bondsquawk.com
April 11, 2011
The hawkish outlook of economists is evident in the 10-Yr breakeven rate, which reached a 3-year high of 2.66% at the end of last week and currently trades at 2.65%. The 5-Yr breakeven reached a high of 2.46%, its highest in 3 years. Treasury breakeven rate is the difference between the yield of Treasuries and TIPS (inflation indexed securities) having similar maturities which shows traders’ expectations of inflation
April 1, 2011
The March employment report came in above expectations with a 216k increase in nonfarm payrolls after a 194k increase in February. While weather effects that had boosted February faded with construction shedding 1k workers after rebounding 37k in February, other sectors more than made up the difference. Somewhat surprisingly the manufacturing sector saw a loss of momentum adding just 17k people after 32k a month earlier. Meanwhile the private service sector saw hiring surge
March 28, 2011
Personal consumption spending rose 0.7% in February, a little above consensus expectations, while income grew just 0.3%, a little below consensus forecasts. The combination led the personal saving rate to dip to 5.8% from 6.1%, still an elevated pace by historical standards. Most of the increased spending came from higher prices, and real spending expanded 0.3% after a flat reading a month prior. On a 3-month annualized basis consumer spending rose 2.1% through February,
By Maulik Mody – Bondsquawk.com
March 22, 2011
High yield bond issuance is reviving this week after falling over 50% for the past two weeks on increased concerns about a nuclear disaster in Japan and growing tensions in the Middle-East. The amount of new issues sold fell to $2.45 billion in the week ended March 18, just two weeks after markets saw $12.6 billion worth of high yield bond sales. This week will see Intelsat issuing
March 16, 2011
The producer price index jumped by 1.6% in February, this time driven by both high energy prices and food prices. Energy prices jumped 3.3% after the 1.8% increase in the previous month. Meanwhile, foods surged 3.9% following a surprisingly weak reading in January. The increase in food prices was driven by a 48.7% surge in the price of vegetables.
Core prices (ex food and energy) posted a 0.2% increase. Core pipeline pressures picked
By Maulik Mody – Bondsquawk.com
March 10, 2011
U.S. government bonds gained after report today showed that the U.S. trade deficit widened in January by almost $6 billion to $46.3B. Economists had expected it to widen by roughly a billion dollars to $41.5 billion. This widening of the deficit was caused mainly as imports increased by 5.2% m/m as opposed to exports, which grew 2.7%. The total export ex-petroleum increased by $4.8B to $19.67B.
Export
By Maulik Mody – Bondsquawk.com
March 9, 2011
Some investors may not know where the yield of a bond is headed, or what the price appreciation will be for a particular bond if rates fall, but they have a general view about the creditworthiness of the lenders and may want to trade based on where they think spreads are headed over time. Trading a CDS for a given issue is one way of trading the corporate
March 4, 2011
The February employment report came in a little stronger than expected with nonfarm payrolls increasing 192k, in line with expectations, while the unemployment rate fell to 8.9% from 9.0% as the participation rate was unchanged. There was also a 58k upward revision to past estimates. Private sector hiring was stronger than expected with a 222k gain while the government sector let go 30k workers at the state and local level. There was some pay
March 3, 2011
Initial jobless claims dropped 20k in the week ending February 26 to 368k, the lowest level since May 2008. This was the President’s Day holiday shortened week, however, the Labor Department analyst said that there was “nothing unusual” in the data. This was the second consecutive reading below 400k, and the first time the 4-week moving average dropped below 400k reaching 389k. Recall, the Labor Department considers that “it takes a sustained improvement below
By Maulik Mody – Bondsquawk.com
March 2, 2011
Stocks inched up higher and Treasuries eased after employment reports showed increased hiring in the private sector and the Fed said in its beige book that labor market is improving. Unrest in the Middle East continued to push oil prices higher. The dollar fell against other currencies while Gold climbed to an all time high.
Economic Data
The ADP employment report showed a pick-up in private
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