Indices and Treasuries see little volatility heading into long weekend

- Equities have spent much of the morning just below the flat line with the most levels being reached following the release of the University of Michigan Confidence data. The softer than expected housing numbers have depressed shares of the homebuilder stocks slightly, but losses are manageable. TOL –1% RYL –1.5% KBH –1.4% LEN –1.4% PHM –1.5% The majority of today’s volatility seems to be earnings related. BWLD +10% AW +3% AMMD +5% BFAM +7% CNTF +10% HITT +13% MHK +6% USTR +9% CPB +6% CAPA –20% CPKI –6% CECO –10% LOOK –15% NHWK –6% GT –3% There does seem to be some money flowing to some of the consumer related names. PG +0.6% CL +1% BKC +0.9% DRI +1.3% WMT +0.6% SWY +0.5% KR +0.5%

- Treasury futures have pared earlier gains in today’s abbreviated session following the release of weaker than expected data on the housing market and consumer confidence. Although Housing Starts for Jan. fell sharply to 1.408M units from 1.643M and Building Permits declined to 1.568M from 1.613M, economists have attributed the weakness to very cold temperatures in several regions in the U.S. in the second half of Jan. Real money is said to have sold 10Y notes into the earlier strength and Asian central banks are said to have been sold 5Y and 10Y notes. Technical resistance at the 10Y and 30Y contracts’ 100 day simply moving averages has been cited as an excuse for profit taking going into the long weekend. At 11:00 the 30Y future is up 5 ticks at 111 14/32 and the 10Y future is up 2 ticks at 107 18/32. Crude has been drifting steadily higher since the open on the floor and now stands up close to 1% on the session at $58.50. Metals are pretty quiet with Cooper giving back a small portion of yesterday’s run-up. April Gold is down fractionally holding around the $669 level.

- At mid-session the dollar is trading mixed against major currencies in what has been a fairly quiet session. For the most part, the greenback took the weaker than expected data on housing and consumer confidence in stride, though has weakened to near unchanged against the euro, sterling and the Swiss franc mid-day. Asian central banks are said to have been buyers in USD/JPY on the lows around Y119.00 after the pair took out a reported barrier option at the level, giving the greenback a lift to Y119.40. Traders will be looking to next week’s data on U.S. CPI for Jan. for further direction after a weak week for the greenback after a string of disappointing data, including retail sales