March 8. Old School

–Relatively quiet day Tuesday, with yields edging higher.  Tens up 1.6 bps to close 250.9.  Red/green euro$ pack spread rose nearly 1 bp to end at a monthly high of 39.5 (the peak last December was 44.5).  Today’s news includes ADP expected 183k, Productivity 1.4% and ten year note auction.

–Fundamental data is mixed.  For example, the Atlanta Fed revised its GDP Now Q1 growth forecast to just 1.3 from 1.8. “The forecasts for first-quarter real personal consumption expenditures growth and real nonresidential equipment investment growth fell from 2.1 percent and 9.1 percent, respectively, to 1.8 percent and 7.3 percent, respectively, after Thursday’s motor vehicles sales release from the U.S. Bureau of Economic Analysis.  Q1 GDP went from 1.8 on March 1 to 1.3 on March 7.”

However, global passenger air traffic reportedly grew 9.6% yoy, the fastest pace in years (according to BI it’s correlated with global growth).  Then there’s Consumer Credit from yesterday afternoon, showing growth of just 2.8% with revolving at MINUS 4.6% (lower by $45.5b).  Finally, I would note that last week’s Trump inspired rally in stocks has evaporated in the past two days.

–In any case, treasuries are trading a bit soft this morning heading into the ten year auction (30’s tomorrow), and in front of next week’s FOMC.  One of the headline summaries of Gunlach’s new presentation yesterday: `OLD SCHOOL’ SEQUENTIAL RATE HIKES MAY BE COMING.  Blue, you’re my boy!

Posted on March 8, 2017 at 5:31 am by alexmanzara · Permalink
In: Eurodollar Options

Leave a Reply