(COMTEX) B: US DEBT FUTURES ALERT: Eurodollars jittery over GDP
B: US DEBT FUTURES ALERT: Eurodollars jittery over GDP
BridgeNews--Chicago, Thursday, Oct. 26
Central Time
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1330: Eurodollar futures were slightly lower amid choppy trading. Traders said
there was a good amount of short-covering because participants thought earlier
that the market was finished with playing off equities. One trader said he had
not seen a lot of paper, but locals had been very active. Nervousness over
Friday's third-quarter gross domestic product report, which some analysts are
now saying could be weak, was keeping pressure on eurodollars. Mar was down
0.020 at 93.515. Treasury futures were not feeling that pressure; the market was
in positive territory across the curve. Dec bonds were up 12/32 at 100 23/32,
well below the contract high set earlier at 101 11/32, and Dec 10-year notes up
2/32 at 101 11/32. Eurodollar players included Carr Futures, which sold 2,000
"red" packs and has sold a total of 3,500 in the past two days.
1215: Dec bond futures continued to outperform the rest of the curve, reaching a
high of 101 3/32, up 24/32. The earlier buyback was boosting bonds, as were
sustained losses in equities. "The long end is in its own world today," said one
trader. "We don't quite know what it's doing. This is just a weird day." Recent
players included Merrill Lynch and Morgan Stanley, which each bought 1,000 Dec
10-years, and Prudential and Goldman Sachs, which each bought 1,000 Dec bonds.
1045: Treasury futures got a small bid from the Treasury buyback, with Dec bonds
erasing losses and reaching a session high of 100 24/32 before drifting back to
100 22/32. Dec 5-year and 10-year notes gained ground, moving back to unchanged.
The Treasury paid $1.935 billion to buy back 30-year bonds with a face value of
$1.5 billion. The offer ratio was 3.539, below the average of 4.16 for
the past 12 buybacks. Offers for nine of the 11 eligible 30-year bonds were
accepted.
0915: Dec bond futures have given ground, trading down 2/32 at 100 9/32 as the
equity markets have moved higher. One trader said bonds pushed higher in early
action amid buying ahead of the Treasuries buyback.
0830: Dec bonds traded steady at higher levels, up 7/32 at 100 18/32, far
outperforming the rest of the curve. Stock indexes have shown initial early
strength and may pressure Treasuries, especially 10-year notes; Dec was down
1/32 at 101 8/32. Options trading has been active; Lehman sold 5,000 Jan 101
5-year note calls at 35 delta neutral. JP Morgan sold 5,000 Mar 106 bond calls
while buying
5,000 Dec 104 calls at a spread of 16/64 with Mar 106 calls over. JP Morgan also
sold 3,000 Mar 94 bond puts vs. Dec 96 put "diagonals" at 13/64.
0747: Treasury futures saw a brief uptick on the soft ECI data, but quickly
slipped into negative territory. Although traders said the ECI report should
give the Federal Reserve room to lift the tightening bias, the market was more
preoccupied with expectations for higher crude oil and stock prices. Smith
Barney bought 1,000 Dec bonds, while Lehman Brothers and Prudential each bought
1,000 Dec 10-year notes. Carr Futures sold 1,000 Dec 5-year notes. Open interest
in bonds rose 4,889 contracts Wednesday to 425,665 on volume of 181,069. Open
interest in 10-year notes jumped 13,090 to 575,714 on volume of 164,924.
0645: Treasury futures moved slightly higher overnight in Chicago Board of
Trade-Eurex trading. Dec bonds were trading at 100 13/32, up 2/32. U.S.
Treasuries were moderately higher overnight ahead of a few days filled
with important data. Thursday's session could possibly focus less on stocks and
more on fundamentals; the employment cost index will be released at 0830 ET. The
ECI report relies heavily on strong productivity. Rapid productivity gains have
kept unit labor costs in check and will buffer the headline figure of the
report, which a BridgeNews survey has pegged at up 0.9%. But the benefit
costs figure is the most important item to watch this quarter, analysts said.
Weaker equity markets will contribute to an increase in benefit costs as firms
are forced to contribute more to pension plans as stocks fail. Thursday also
brings the Treasury buyback of up to $1.5 billion in 30-year bonds. Treasury
Secretary Lawrence Summers is slated to speak in the afternoon and market
participants probably will listen closely to his remarks after the recent
hawkish Federal Reserve speakers. Still, equities will certainly play a big part
in where the Treasury market
moves Thursday, said a London broker. Pivot point resistance was pegged at 100
30/32 and 101 16/32, with support at 99 31/32 and 99 18/32.
On the calendar (CT): --0730: Q3 employment cost index (Q2: +1.0%; Forecast:
+0.9%) --0730: State unemployment claims for week ended Oct. 21 (Week ended Oct.
14 -7,000 to 307,000; Forecast: 310,000) --About 0830 ET: Revision to September
building permits --0900: September Conference Board help-wanted index (August:
-2 to 78) --1000: Treasury announces results of its buyback of up to $1.5 bln in
30-year bonds --1315: Treasury Secretary Lawrence Summers and Deputy Secretary
Stuart Eizenstat make remarks at a National Money Laundering Conference --1330:
Treasury announces size of 13- & 26-week bills |
