Treasury Market Preview

Treasury Market Preview by Trade the News Staff

- On the U.S. calendar today is just one release, the Monthly Budget Statement for Feb. Later this week we have Advance Retail Sales for Feb tomorrow. On Wednesday the Current Account Balance for Q4 and the Import Price Index for Feb will be released. On Thursday we the Producer Price index for Feb is due out as well as Net Long-term TIC Flows for Jan and the Philly Fed Index for Mar. On Friday we have CPI, Industrial Production and Capacity Utilization for Feb and the University of Michigan Confidence Index for Mar. In Fed speak today, Kroszner speaks on Community Banking at 12:45.
- Major wire pointed out today that according to a recession model created during Greenspan’s tenure as Fed Chairman, the probability of a U.S. recession has risen to 50%. Last week, Greenspan said there was 1/3 chance the U.S. economy would fall into recession this year. .
- Regarding the subprime sector, shares in New Century Financial are down 42% this morning to $1.86 after giving an update on financing and receiving a downgrade at UBS. The company disclosed that all of its bank lenders had either cut off their short-term funding or notified the company of their intent to do so.
- The CFTC reported late last Friday that futures only position in the 10Y future moved more long last week to 325,194 contracts from 296,152 contracts. Futures only position in the 30Y moved more short to a –111,303 from –87,499.
- In new supply this week, the Treasury will sell $8.0B of 10Y notes tomorrow. Last week corporate borrowers sold roughly $30B of new investment-grade bonds, the most so far this year. That was up from $8 billion in the previous week.
- In European economic news, Input Producer prices in the U.K rose more than expected by 1.3%, while ouptut producer prices increased 0.3%, above expectations of 0.2%. Also in the U.K., the DCLG U.K. House Price Index rose 10.9% in Jan. above estimates of 9.6%. In Switzerland, CPI rose 0.4% in Feb, matching expectations. In Italy, Industrial Production fell more than expected in Jan. by 1.4%. In Germany, the Kiel Institute rose its 2007 German GDP forecat to 2.8% from 2.1% and boosts its 2008 view to 2.4% from 1.8%. Elsewhere, ECB’s Liebscher commented in an interview that one cannot consider the ECB’s job done on rates given the price risks. ECB’s Gaspari, said a short while ago that wage developments have been moderate thus far and that the Euro-zone is an economically healthy area at the moment.
- In Asia, the Chinese trade surplus rose to a near record $23.76B in Feb. The governor of the PBOC, Zhou, said today that trade imbalnces will most likely persist for a while. In Japan, Q4 GDP was revised up to 1.3% from 1.2%.
- At 81:0 a.m. the 30Y future is up 2 ticks at 112 16/32, the 10Y is up 1 tick at 108 12/32 and the 2Y future is up ½ tick at 102 12/32.