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11:45 am - Ticking in Place: Bonds have been loitering around most of the session with little to push prices while news yet to come keeps things in check. The fall-off in stocks heading into midday won't likely do much for prices unless it gains some velocity and gets the S&P's to take out the 1263 area with some conviction. Even then, however, the market will be hindered by up coming supply. Traders say they are clearly both concerned over the combination of slowed growth and inflation and are curious to see how the last FOMC "talked" abut things. The housing data, while a mix, is keeping a floor under prices.
11:23 am - Stuck Lower : The market slipped out the door and has yet to pull itself back up. Trade is looking ahead to FOMC minutes following mildly better-than expected data which sparked some position squaring. The hours in between look to be spent eyeing weather reports and stocks. The ground has opened up a bit with prices looking precarious. A more-than expected hawkish FOMC meeting from early Aug could pull trade deep into the hole. The dollar is working off some overboughtness with trade eyeing a close below 1.4630 to the euro to bolster near term sentiment.
11:18 am - Stalled in Quiet Trade : Bonds remain under pressure in light action but with the data done, FOMC minutia on the backburner and supply on tap, however, trade may become somewhat hypnotized by the machinations in stocks. The market will be tethered to a tight range, with the downside possibly seeing a little more as bits and pieces of profit-taking go ticking through. Things remain somewhat focused on Fannie and Freddie, but until there's more to work with they lose a little of their grip on trade. The 10-yr should be able to keep a floor in and should have some trouble getting the yield back through the 3.835% point.
10:46 am - Sputtering Lower : The market is rolling over with momentum fading at trend highs of 117-01+. Should trade decide to pack it in the downside could see some serious plumbing leaks. Holding above 116-02 keeps the focus on the upside while below could trigger some stop runs and a sizable retracement.
10:14 am - Data Don't Help : The market was offered lightly ahead of the reports which hit with a size improvement to 56.9 versus the expected 53.0 on the confidence number. The home sales showed 515K a recent low but an "improvement" from the previous revised number, which went off to 503K from the reported 530K (initially a typo perhaps?). The median prices were off -6.3 yoy, but were slightly improved against the June. Inventories remain deep, 10.1 months, but that was improved against the previous 10.7. The market has slid since the reports were sorted out but the mix was generally bond negative on the surface. The OFHEO reported actual sale prices were unchanged in June, slowing in the rate at which they had been coming off.
09:54 am - Lower, Waiting: The market is waging an uphill battle with stocks wavering early, but likely to choose higher. The market is staring down the barrel of a large batch of $54B 2-and-5-yrs coming up and data likely not as bad as it could be especially with fairly low expectations, while the FOMC minutes sit at day's end. Meanwhile, comments to DJ from Dallas' Fisher ran from inflation "50-50" but "Growth will taper down...to a snail's pace in the second half... [and] may be anemic for a while...I could see us approaching, certainly, broaching zero." (Reuters)
09:46 am - Cash to System : Fed adds $6.5B via 2-day repos and $20B 28-days.
09:35 am - Dollar Doubles Back : The buck is retreating after grabbing fresh territory against the euro. While the dollar continues to benefit from other peoples weakness its overboughtness will likely keep trade from getting out too far ahead of the first-in, first-out (FIFO) recovery prospects for the US versus the rest of the world. The dollar can still suffer in its own right with much uncertainty clouding the picture. But for now trade is running with the FIFO economic recovery theory rolling across the globe and that should keep things supported. The euro is bid near 1.4565 and offered near 1.4640 while weak German confidence sent the euro through lows near 1.4630 overnight. Trade will eye a close below to add to downward momentum. Against the yen, the dollar is wedged between 109.50 and 110.65. The pound broke down in tandem with the euro with support near 1.8325 with resistance near prior lows just above 1.84. Spot gold is 815.58 (-6.38) while crude is trying to recover to 116.11 (+1.00).
08:59 am - Data Due : The market keeps nicking off getting drag as positions are squared and trade is still toiling in ultra-thin conditions. The day's data, which starts with the housing report out of Case-Shiller, expected to come in lower on prices, albeit not terribly so and a further fall off on the index, making new records in the 8-yr life of the measure. The later data will have the new home sales expected to show a minor fall to 525K from 530K but still near the lowest levels since 1991. Consumer confidence should improve slightly, to 53.0 from 51.9 in July, but also at the worst levels since the early 90's.
08:40 am - Slip on Open : The market got dinged right off the open, but bounced back some after a brief tag of the 3.8% level on the 10-yr yield as the curve flattened. Volume remains horrible, so swings will be wide. The market will be facing weight on clean-up from the recent run-up as well as supply on tap on the week and in front of the data.
08:21 am - Sideways : The market is sitting almost right on top of where it left things yesterday. While trade lacks the conviction to take prices to the next level, no one is willing to jump ship just yet. Much remains unresolved in credit markets and geopolitics and that should continue to keep prices supported. The 2-10-yr yield spread is nearly unchanged at 146.6 after a brief journey steeper overnight. Bond prices in the EuroZone are bid following weak German confidence reports while in Japan bonds were boosted by strong auction results. Treasuries wade through minutes to the FOMC meeting from back at the beginning of Aug and some data. The market expects an emphasis on growth risks and that is likely what it will get. Should inflation carry the bias, trade could use that as a catalyst to bail from these lofty levels. The data may factor in for a few swings and any upside surprise will likely test the dip buyers resolve. Barring a huge surprise, none of the events pack the punch needed to get over the hump. The euro got slammed across the board on the poor data that showed confidence in Germany at the worst level since mid-05. The yen also slid on the buck, but the buck is still unable to take the 110.00 level. Gold got hit on the better buck, with spot now 811.13 (-10.83) while crude slipped as well 115.59 (-0.52) with lessened supply concerns. Data due has consumer confidence, new home sales (10) and FOMC minutes (14).
