MARKET TALK is edited by Darlene Ross of Dow Jones Newswires, 201 938-2085; darlene.ross@dowjones.com]
1850 GMT [Dow Jones] USD/CAD has surged after USD improved generally in wake of comments from Fed Governor Bernanke. Currently at C$1.3385, almost 100 ticks above sessional low and not far from key pivot zone at C$1.3430-40. (DBC)
1845 GMT [Dow Jones] The U.S. 10-year has tested important daily resistance at 4.174%, which is a potential intraday top. Given quiet trading ahead of Friday's January jobs report, 4.174% may be a "magnet price" around which the yield would oscillate during the rest of the current session. If resistance is taken out the yield will be pointed towards the area between 4.292% and 4.259%. But if the yield backs off here then traders can look for a dip to 4.027%. (SWC)
1842 GMT [Dow Jones] Stock index futures get a jolt after Bernanke says GDP can exceed 4% this year, and low inflation has given Fed luxury of being patient on rates. Buy-stops hit around 1128.00 in March S&P, contract still hasn't managed to tackle resistance at Wednesday's open-outcry high 1132.30. March S&P last +6.10, March Nasdaq +13.00, March DJIA +60. (KJZ)
1833 GMT [Dow Jones] 10-year has made a brief run above 4.17%, its highest level this week. The market remains very nervous ahead of payrolls, but traders say a figure in the 125 to 225K region will maintain the range trade. 10-yr last
4.16%. (MLM)
1826 GMT [Dow Jones] Looks like the fed funds futures market may be on target with its priced in Fed expectations. Bernanke says Fed can be patient, and fd
funds futures pricing in a late summer hike. (CMN)
1823 GMT [Dow Jones] The selloff in Treasurys is broad based with the 2/10's curve at 233, only a touch flatter from 234 before Bernanke spoke. Traders are jittery before payrolls and have focused on his bullish labor market remarks. (MLM)
1813 GMT [Dow Jones] As for those looking for hints on monetary policy, Bernanke said low inflation gives the Fed the "luxury" of being patient when it comes to increasing short term rates, which sit at 1.0%. Many in the market
expect the Fed to raise rates this summer. Treasurys are weaker on the Bernanke comments. (ATC)
1811 GMT [Dow Jones] As Treasurys come under pressure, so swap spreads are edging wider. 5 & 10-yr spreads now out by around 1.5 BP at 41.5 and 40.5 BP. 10-yr in the middle of its wider 35 to 45 BP range, but a close above 40 BP would be the first since Dec.3. (MLM)
1810 GMT [Dow Jones] Bernanke may be on the wire saying that deflation risk has "retreated very substantially," but fed funds futures prices aren't off much from where they were earlier. Contract still sees August 10 FOMC meeting as
first 100% chance of rate hike this year. (CMN)
1808 GMT [Dow Jones] Bernanke says that a weaker USD will help US exports and that its value is not determinant of inflation, which will perhaps alleviate concerns of those who fear a declining dollar will usher in higher consumer
prices eventually. This all ahead of the G7 meeting, which begins Fri, and will be closely watched by bond and F/X participants for any comment on exchange rates. (ATC)
1807 GMT [Dow Jones] Canada's GDP will grow by 3.0% this year, according to a survey of 55 economists by consulting firm Watson Wyatt. The survey forecasts inflation of 1.8% in '04 and 2.1% for the long-term, and 4.1% growth in the U.S. in '04. Canadian labor productivity growth is seen at 2.0% for the long term, while unemployment rate is seen dropping from 7.4% this year to 6.8% longer-term. (DBC)
1806 GMT [Dow Jones] Eurodollar futures extend lows as Bernanke seems to be preparing market for rate hike. No huge moves, however, with Sep last down 4 BP. Those buying puts earlier seemed to have the right idea though. Support at 98.355, second pivot drawn from Wed's action. (KJZ)
1804 GMT [Dow Jones] Treasurys are lower after Bernanke said signs of deflation have subsided substantially, leaving some market participants with the idea the Fed could move sooner rather than later. But Bernanke also said that inflation is "contained" which would give the Fed plenty of room to simply stay on hold. "This is ridiculous," said one analyst who attribute the knee-jerk reaction to jitters ahead of Fri's employment. "It's really hard to put a lot of weight behind it," he added. 10Y now at 4.13%, down from the 4.16% touched after
Bernanke's comment, but up from 4.10% area beforehand. (ATC)
1800 GMT [Dow Jones] The dollar is gaining ground as Fed Governor Bernanke asserts that inflation will remain "contained," 2004 GDP could top 4% and recovery will be balanced. EUR/USD at 1.2580, USD/JPY at 105.53, USD/CHF at 1.2454 and GBP/USD at 1.8376. (SBC)
1758 GMT [Dow Jones] Stock index futures rise in subdued trade as participants wait for Fri's jobs report. A little noise from Fed's Bernanke, but the headlines are having greater impact on credit markets. Traders see larger chance
of a strong jobs report than a weak one, so not too many wanting to sell aggressively, despite market's shaky technical condition. "People have gotten conditioned to buy on deep dips the past six months," says one floor trader.
March S&P last +0.40, March Nasdaq +5.00, March DJIA +12. (KJZ)
1757 GMT [Dow Jones] Reiterating what many private sector economists expect, Bernanke says that 2004 GDP could top 4%. In addition, the deflation concerns first flagged last year by the Fed have subsided significantly, he said, adding
he is confident inflation will be "contained." (ATC)
1755 GMT [Dow Jones] Bernanke remarks may have come a little late, but they were worth the wait for Treasury futures bears. Contract has dropped back about 10/32 to near unchanged. (CMN)
1754 GMT [Dow Jones] Fed Bernanke has started to speak and is saying that worst problems plaguing the corporate sector of the economy have been overcome. Bernanke also expects a more balanced recovery in the U.S. economy. (ATC)
(END) Dow Jones Newswires
02-05-04 1350ET(AP-DJ)--02-05-04 1350EST |
