Treasury Prices/Yields and the Economic Calendar

Today was a full day of news of the economy, but not a lot of changes in the bond markets.

Treasury Prices/Yields and the Economic Calendar
Today was a good day of news for those who rely on, or are just plain interested in the current economic data. As a stockbroker I soon learned the importance of following all the economic numbers as they were released each week.
The second straight month of strong existing-home sales gave a boost to the housing outlook and the stock market. The S&P rose to 1,118 for its best level of the year. Unfortunately a downward revision to third-quarter GDP, now up 2.2 percent, kept a lid on the enthusiasm in the market. Oil bounced around, then ended at $74, and gold ended at $1,083. Commodity markets didn't show much reaction to very strong import data out of China where demand for all commodity groups continues to rise.
 Chain store sales fell sharply, to the tune of two percent, due in part to storms in the northeast. Stores are expected to increase days and hours of operation to help improve lagging sales.
This weekly measure of comparable store sales at major retail chains, published by the International Council of Shopping Centers, is related to the general merchandise portion of retail sales. It accounts for roughly 10 percent of total retail sales.
Consumer spending accounts for two thirds of the nation’s economy so if you have an idea of what customers are up to you will have a better idea as to the direction of the US economy. This report is published every week and is a leading economic indicator.
It now appears that the economic recovery is not as strong as was previously believed with the GDP (Gross Domestic Product ) numbers being revised downward to an annualized 2.2 percent from the prior estimate of 2.8 percent.
The number is primarily lower due to lower estimates for inventories. Also revised lower were government purchases, nonresidential fixed investment, residential fixed investment, and personal consumption.
Gross Domestic Product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. The GDP report contains a plethora of information which not only paints an image of the overall economy, but tells investors about important trends within the big picture.
Gross domestic product is the country's most comprehensive economic scorecard.
Corporate profits, while revised downward are still up sharply from the second quarter. Corporate profits also reveal the health of an organization. When a company's profits are anemic during economic expansion, it suggests that the company is not performing efficiently, and that inefficiency will be reflected in the company’s stock price.
The Redbook report is a weekly measure of sales at chain stores, discounters, and department stores.

Redbook reported a positive 1.9 percent year-on-year same-store sales rate for the Dec. 19 week. It is up nearly a half a percent from the year-on-year rate in the prior week. Despite the gain, the report is downbeat saying retailers are scaling back their December numbers.
Existing home sales were strong across every region. Existing home sales jumped 7.4 percent in November on top of October's record 9.9 percent surge. The year on year rate is up 44%. Strong sales and low construction are draining supply which is at a 3 ½ year low. The report, compiled by the National Association of Realtors, estimates that government credits will add a very strong total of 4.4 million sales by June. This just goes to show you how much government programs can help the economy.
Once the home is sold, it generates revenues for the realtor, and also creates the ripple effect as buyers often need to purchase appliances for the new home. When you think about it even just a few sales generates income for everyone down the line, from the realtor, to the appliance guy, to the furniture store and the hardware store as new homeowners stock up on home maintenance things like, shovels, rakes, lawnmowers, sprinkler systems, gutter and drainage supplies; the list goes on.
There was little to no change in treasuries from last week’s auctions.
3 month T-Bill                                   Current Price/Yield                                        Price/Yield Change
                                                                0.06/0.07                                                             -0.005/-0.005
6 Month T-Bill                                   0.16/0.16                                                             -0.003/-0.003
12 Month T-Bill                                 0.38/0.39                                                             -0.011/0.011
5 Year Note                                        98-14/2.46                                                           -0-10/.068
10 Year Bond                                     96-28 ½ /3.75                                                      -0-20/.077
30 Year Bond                                     96-07+/4.61                                                        -0-25/.049
Prices/Yields current as of 6.52 EST

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