03:03 PM
Closing: The market was working to maintain its long end while the shorter durations hold on offer while curves are generally flatter with the 2-10-yr yield spread hanging near 277.2 and as other spreads, is at the week's tightest. The 10-yr is ticking around either side of the 3.72% point while the 30-yr has also grabbed back the past 2 session's losses but is running into some trouble at 4.65%.

02:48 PM
Foreign Correspondent: Buck Soup: The dollar is treading the usual path of ranginess while weak trade data are taking some of the wind out of the sails of the risk-on crew. While the rhetorical Crisis, What Crisis! approach to sovereign debt concerns and positive auction results (Greece and Portugal) across the pond have tempered sinking feelings, the implications of fiscal belt-tightening will likely be severe with Deutsche Bank suggesting Greece's economy will "contract substantially more this year than the government ]forecast]...0.3 percent drop... could be closer to 4 percent. The steepest contraction in more than three decades" [Bloomberg]. The dollar index continues to plod around mid-80s. The euro made another head-fake on an approach of the 1.37 handle but the retracement has been contained down by 1.3620 so far. Such pro-longed indecision makes for some interesting analytical excursions with one source saying that in order to figure out trend, traders have "turned to the words good old Winston Churchill used to describe Russia ‘It's a riddle, wrapped in a mystery, inside an enigma'" [IFR] while our Russian source responds "it's just a different culture, that's all!". In the meantime, "we see better value in buying dips or waiting to trade the response to the primary downtrend line". [Thompson Reuters]. The pound is working back-and-forth of 1.50 with no apparent desire to ramp up action in either direction. But with a failure near session highs of 1.5068 trade is looking to "get short for a continuation of the bigger downtrend. A break above would probably mean a test of Monday's 1.5085 intraday high" [IFR].

02:11 PM

Quiet: Trade has been working to hold better with the size dying off. The curve has held flatter and the 30-yr is sitting near 4.67% and 4.66%

01:45 PM
Watching the Direct Bids: Treasuries were swung higher with the 30-yr running up to take about 7 basis points off the yield after the aggressive demand saw the auction go off at a much better level than expected. The issue of the direct bidders remains a sticky wicket as the market doesn't know where or who those bids are coming from. The record 29.3% slice compares to a 23.9% indirect (read somewhat measurable and identifiable) take, which was below the directs for the first time. Traders are still not sure just how to "handicap the situation" in the current "what what?" environement. One longtime player notes, with the end of government bailout support for the mortgage world coming at the end of the month (along with the market tics that may be the result of Japan's year end) how things will shake out. The market was looking for a relief rally either way, the excellent showing on the auction just added to the bounce. On the other hand, the market is still facing global supply of unprecedented levels and that will keep a lid on prices, while the determination of buyers to grab up some long duration safety leaves some wondering what is the next shoe to drop? The curve saw the 2-10-yr yield spread unwind sharply flatter to 277 while the wider 2-30-spread was also off to the flattest on the week. The dollar copped a bit of a bid with the index sneaking back to 80.38 from 80.30, the euro made yet another failed bid at 1.3680, before retreating to 1.3660. The yen also slid but is holding near 90.60 in quiet trade

01:16 PM

Everything Counts: The auction took a surprisingly good turn with buyers chasing the yield lower in an effort to grab the longer duration issue. The large chunk that went to the direct bidders was a record level, while indirects got significantly less-than-average.

01:10 PM

Auction Out: The $13B 30-yrs draw 4.679%, well lower than anticipated, while the 2.89 carry and an indirect take of 23.9% while directs took a record 29.6% of the reopened offering pie. The market saw the long bond spin higher, trading up to tag the 4.655% yield from 4.72%

 

12:58 PM
Issues: Medtronic launches $1.25 bln 5-yrs (est +60), $1.25 bln 10-yrs (est +75), and $500 mln 30-yrs (est +90) - Reuters

12:49 PM

Auction Up: The previous $16 bln 30-yr saw 4.720% with a bid-to-cover of 2.26, an indirect bidder participation rate of 28.5% and a direct bidder take of a whopping 24.1%. The 10-auction average is 2.47 cover, 41.47% indirect take and a 7.98% direct accepted. Today's $13 bln will have the direct bidders once again a focus, as funds may step in outside the primary dealers and buy through Treasury on the down low. The week's 3-and-10-yrs both saw significantly larger than average chunks being swallowed by the "anonymous" buyers. Either way, unless the auction is a complete botch, there will likely be a minor league relief rally. The 30-yr is 99-00 with the "when issued" 4.685%, high side 4.72%

12:28 PM

Technically Speaking: Orftech's Steve Orfanos watching the 10-yr futures notes that they had "repeatedly found support at 116-24/23," but has now ticked off to the 116-18 point looks to 116-16/14, here, for the short-term, "the downside is limited. This is more of a gut feeling supported by the repeated failure to break out lower and the long-end holding in above its weekly lower boundary. I look for another run at these supports and continue to believe these levels will hold as the Ten-year should begin to rebound. Today, the TYM should trade between either 116-24/21 or 116-16/14 and 117-06, possibly and by Friday 117-12/14."

On the 30-yr futures :  "By breaking below 116-04 the USM stopped in the middle of my next two targets and lower weekly boundary levels (115-31 and 115-24/22).  Today, look for additional consolidation as long as the Bond holds above 115-31 and 115-24/22, the long-end should rebound from these levels.  Today, the USM should trade between either 115-29 or 115-24/22 and at least 116-22, if not 116-27/28."

12:17 PM

Issues: Medtronic selling a minimum $500 mln 5-10-and-30-yrs

PartnerRe Financial selling $500 mln 10-yrs

Southern California Edison selling $500 mln 30-yrs - Reuters

11:49 AM

Slippage: The dollar has been pushing toward the week's lows with the index piercing the 80.30 area, but saw a pretty steady bounce after hitting weak stops and tagging the 80.24 point. The basket may get ridden off to the 79.85 point, but the euro will need to bust out of its extended range, the day's data offered a solid, but fairly brief bounce. The regional currency has failed to aggressively take out the 1.3680 area, but once it navigates that space it should be able to run at 1.3725. The yen saw a bit of a bounce as a rush of China data sent some scurrying for safer instruments, but was eventually ground back to trade near its worst point in nearly 3 weeks and is running flat. The euro keeps trying to get up toward the 124 point, also knocking around near levels from 3 weeks back. The concerns over further tightening out of China should help keep a floor under the yen, but it would run into trouble near the 89.65 point. Gold has been pushed off a 2 week low on technical selling making for the 1100 point, while commodities sink with the CRB running just over the Mar lows. Crude is also wounded and loitering between 81.80 and 82.00, losing some footing with slipping demand expectations.

11:01 AM
Bills: Treasury will sell $27 bln 3-mos and $29 bln 6-mos Mon

10:55 AM

Greece Still the Word: Longtime market maven Jack McHugh notes:

[On Prodi's declaration that Greece's problems are "completely over"] Mr. Prodi may turn out to be right some day, but Greece has yet to roll over huge slugs of debt, and neither the EU nor the IMF has yet wired Athens a single euro. This drama may recede from the headlines for a while, but it is far from over. Mr. Prodi sounds like a police officer trying to clear a crowd away as they gawk at a burning building. "Move along, folks, there's nothing to see now. The Fire Department is here". If the less encumbered EU nations (France, Germany, etc.) can be thought of as the Fire Department in this comparison, then to me it looks like they are standing around and arguing about which fire hydrants to hook up first. Maybe the financial fire threatening Greece will burn itself out via self-imposed fiscal responsibility, but maybe not. The EU hoses may be trained on Greece right now, but not a drop of liquidity has reached the flames.

10:30 AM

Mortgages: Freddie reports 30-yr fixed rate mortgages averaged 4.95% over the past week from 4.97%, 15-yrs were 4.32% from 4.33% and 1-yr adjustables were 4.22% from 4.27%

09:56 AM

Tick Tock: The market is making attempts at better levels, but supply remains a stumbling block and there is caution as trade awaits the offering. If nothing else treasuries should see a bit of a relief rally once the at-record sized 30-yrs roll through. The offering is coming on the back of the $40 bln 3-yrs and at-record $21 bln 10-yrs as well as amidst a virtual storm of global issuance. The week has seen a run of issuance pent up from a lackluster Feb, when everything was slipping on Greece, with US shops selling $28 bln in bonds this week, usually in large $1 bln to $5 bln chunks. "So far in 2010, U.S. corporations have issued $195.2 billion of debt, excluding government-guaranteed bonds, according to data provider Dealogic, up from $166.8 billion during the same period in 2009." (WSJ)

09:44 AM
Agencies: Fannie launched $6 bln 3-yrs (est +31)

08:58 AM

Sneaking Back: The market pulled better as the data was unwound with the trade report showing a tanking imports while initial jobless claims were in line. The jobless numbers are being given a little less gravity as the calculations are questioned. The 4-wk moving average is running 475.5K remaining on the high end. The data leaned on stocks, helping to lever bonds back some, but the issue of supply will hold advances in check.

08:26 AM
Offered: The market has been pushing lower with the 10-yr ticking back to briefly break 3.745% with stocks pulling back from a sell-off while global bonds generally slide while inflation concerns stalk the periphery. Supply remains the key ingredient with the reopened $13 bln 30-yrs on deck and global corporate offerings continuing to come to the calendar. The 30-yr is a tricky offering and the auction will be approached with caution, but it will also be riding on the solid performance seen Wed on the at-record 10-yr outing. Data will be relevant as well, but because the jobless claims report will be muddies by things like "weather and processing" it will have to miss in a big way for the market to take it seriously. The curve has been slanting flatter with the 2-10-yr yield spread back to 281, but remains range-bound. The dollar has been pinging between 80.35 and 40 on the index while the euro was pulling higher, still shy of the 1.3680 barrier with an uptick in inflation expectations aiding the bid. The yen made a move for better levels but was flipped back to give up 90.70 per buck from 90.20 while making a steady trek worse toward 124 to the euro. Data jobless claims and trade balance (8:30) with the Fed flow of funds for Q409 (12) with NY's Dudley late (16:30). The key event will be the $13 bln 30-yrs.

06:39 AM
The 10-yr Note is at its worst levels of the morning. Equities have recouped earlier losses and are looking at a flat to slightly negative open. The euro was flat vs the dollar. The yen was flat following news that Japan's economy grew less than initially estimated in 4Q09. Continuing Claims for 2/27 and Initial Claims for 3/06 are due at 08:30; consensus calls for 4500K and 460K. $13 bln in 30-yr Bonds will be auctioned. The 2-10-yr yield spread is 282 vs a yesterday afternoon level of 281.5.

04:31 PM

Watching the Direct Bids: Treasuries were able to regain some ground following a darn-near stellar 10-yr reopening that went off at a lower than anticipated yield with a record bid-to-cover ratio and decent foreign entity participation. The market was wounded, however, and still wallowing in a boatload of global supply with tomorrow offering yet another record sized auction with the $13 bln reopened 30-yrs set to go (13). Trade is also battling the push higher in stocks as the world has decided that Greece has cleared some hurdles and the regions problems, even as they pop up like whack-a-moles, are carrying less sting (been-there-done-that trade). The hints at global growth are presenting a renewed "green shoots" environment, but that bubble may burst if retail sales fall off a cliff (Fri). Thurs' auction will be a tough test as, on the one hand, the long bond is offering up a mere 4.685% for 3 decades, but the highest yet, the auctions, across the curve, have been hit-or-miss at best and it seems few have been able to predict the outcomes. But funds like the long maturity and Japan is heading into fiscal year end and may want to pick up some duration. In other words, yet another crap-shoot. The market will be again watching the direct bids for size, which was a whopping 24.1% last time out. The curve worked back to the flatter track with the 2-10-yr yield spread running 281.5, likely to range into the data and auctions (assuming there are no further whispers concerning China on their CPI report). The dollar was up on the yen but offered on the euro with the index likely stuck in a fairly tight range as well. The day ahead has initial jobless claims and trade balance (8:30) with the Fed flow of funds for Q409 (12) with NY's Dudley late (16:30)

06:34 AM
Supply once again is weighing on Treasuries as the 10-yr Note is near lows of the morning. Equities are looking at a flat to modestly higher open. The yen is ~0.05 away from its weakest levels of the morning, trading at ~90.43. Last Friday, the Nikkei newspaper said the BOJ could take additional monetary easing steps. The euro was slightly weaker vs the dollar while sterling continues to struggle. The Australian dollar was stronger vs the U.S. dollar. Wholesale inventories for January are due at 10:00; consensus calls for +0.2%. $25 bln in cash management bills and $21 bln in 10-yr Notes will be auctioned. The 2-10-yr yield spread is wider at 284 vs a yesterday afternoon level of 282.4.