ECONOMY TALK: The consumer confidence index fell to 116.5 in July from 118.9 in June (revised up from 117.9 initially). That was below expectations as the market was looking for a 118.0 reading. The decline was concentrated in the current conditions component, which fell to 152 from 156.8. The six-month outlook component fell to 92.9 from 93.5. The data isn't due out until 10 a.m. but was apparently leaked early.
9:34 AM
ECONOMY TALK: Consumer confidence index said to fall to 116.5 in July from 118.9 in June (revised up from 117.9 initially). The market was looking for a 118.0 reading. The data isn't due out until 10 a.m. but was apparently leaked early.
9:07 AM
ECONOMY TALK: Chain store sales were mixed last week with the weekly Redbook Research index rising 1.6% in the three-week period ended ended July 28 compared to the same period a month ago. Discount retailers continue to see above-plan sales while department store sales continue to lag and are expected to end the month below plan, but the overall rise of 1.6% from 1.3% last week was a solid increase. Meanwhile, the BTM-UBS Warburg retail sales report showed a 0.3% rise in the week ended July 28 after two weeks of decline. This data series will be extremely important to the markets as market participants look for signs that tax rebates are impacting sales. About $3.3 billion in rebates were delivered last week. The BTM report can be found here.
8:49 AM
EXTENSION TALK: The duration on the Lehman Treasury index is said to be going today up by a small 0.01 of a year, the lowest since June 1999 and one of the smallest increases on record. The small increase is the result of high levels of issuance in short maturities. The duration increase generally forces a recalibration by portfolio managers that is akin to a re-weighting in the S&P. Non-indexed money managers generally start buying close to month-end while index managers wait until late in the last day of the month. Index managers are not "allowed" to start buying until 3 p.m. when the index officially adjusts, but there is almost always some cheating. Speculators, of course, jump on the bandwagon. To put the extension into perspective, in order for portfolio managers to recalibrate their portfolios, it is estimated that for every .11 of a year increase in the aggregate index, the investment community will need to buy roughly $4.7mm 5-year T-notes or $2.7mm 10-year T-notes for every $100mm invested. Another firm estimates that for every $1 Bln managed, portfolio managers will have to buy $22mm of 10-year notes or $37.5mm of 5-year notes.
8:32 AM
ECONOMY TALK: Personal income rose 0.3% and spending rose 0.4% in June, above the consensus for a 0.2% rise in income and a 0.3% increase in personal spending. That follows a 0.2% rise in income and a 0.3% rise in spending in May. Spending on durable goods rose 1.5% in June after declining by 0.2% in May while nondurable goods spending fell 0.2% after rising 0.6% the previous month. Spending on services increased 0.4% following a 0.2% rise in May.
8:30 AM
ECONOMY TALK: Here is a link to the June personal income and spending report.
8:23 AM
Eurozone bond yields are lower this morning with the benchmark 10-year German yield down 2 basis points at 4.87% and the two-year German yield down 1 basis point at 4.11%, both at their lowest levels since early April. Eurozone bonds found support from a rise in the French unemployment rate to 8.8% in June, the highest since January and up from 8.7% the previous month. The market was looking for no change. Also, Italian producer prices fell 0.2% in June, vs. a 0.4% decline in May. The market was expecting a flat reading. And German plant and machine orders fell 9.0% year-over-year in June, down from a 1% drop the previous month. The euro is up about 0.2% vs. the dollar while European equities are little changed.
8:04 AM
Monday's call/put ratio in T-bond futures was 0.59:1, down from 1.87:1 on Friday. That dropped the 10-day average to 1.25:1, low compared to the one-year average of 1.31:1. The 10-day average hasn't dropped below the one-year average since June 29. In 10-year notes, the 10-day average remains high at 2.04:1 when compared to the one-year average of 1.44:1. |
