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[EUR] Eurozone/UK FI strategy - Weds 20 Aug
[EUR] Bunds remain steady, with the 10yr yield still hovering around 1.00%. For today's European bond strategy, please see below.
8/20/2014 7:34:14 AM
[MKT] News & Rumours from Asian Session
[MKT] Following are the key News & Rumours from Asian Session
8/20/2014 5:25:48 AM
[INT] US Treasury Strategy
[INT] A day after erasing last Friday's push higher, Treasuries continued to struggle on Tuesday with the market growing a bit calmer about Russia/Ukraine tensions and with stocks continuing an impressive recovery. Data continued to show a rebound in demand indicators but with benign inflation metrics keeping the Fed at bay for now. Stocks love that. Housing and construction activity will play an important role in the continued improvement in the labor market. Although a buildup in student loans among potential first time buyers is a problem and the overall residual fears from the great recession are still restraints, this leaves plenty of room for housing growth amid pent up demand, high affordability and gradual improvement in the labor market. Here the indicators are good with July housing starts increasing to 1093k (+15.7% m/m), well above market expectations for a 965k result. The forward looking building permits increased +8.1% m/m to 1052k in July, versus the revised 973k reading that occurred in June, also well above market expectations. Construction hiring has been a lagging sector of the labor market and should get a boost in months ahead while home purchases tend to support all kinds of durable goods purchases and other home furnishing spending. The question is whether the lack of labor's bargaining power will keep wages and thus inflation from pushing higher as demand picks up. This trend of stagnant wages for almost all but the top is likely to persist, but even so there is room for some modest upside as the unemployment rate falls further, already evident in wage gains the BLS has cited in several key sectors such as leisure/hospitality, transportation, professional business services, construction and retail, all rising in the 2.2% to 2.7% range year on year, much improved from mid 2013 year on year levels. FOMC minutes on Wednesday may reveal more about the hawkish minority concerns, but the market will be more eager to hear Yellen at Jackson Hole a couple days later for any hints at a pivot. Probably a bit too soon for that. Technically, in the September 10Yr contract, T-Notes look to hold 12605/12600 and turn up again. 12619 may prove sticky, but the trend favors 12701+ in due course before the market may then top. Below 12600, however, can threaten 12523/12518 swing.
8/20/2014 3:51:45 AM
[USD] DJIA/S&P 500 Index Technical Updates
[USD] DJIA/S&P 500 Index Technical Updates.
8/19/2014 7:35:17 PM
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a further upleg. USD should be choppy on the majors, though into 2015 we still
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USD bulls: IDEAglobal would argue that the change in the Fed balance sheet is more important for the USD than the outstanding size of the Fed balance sheet. Chart 1 shows that when the balance sheet expansion ebbed in 2011, the USD gained ground. This could be a function of Fed flows partially seeping abroad, but also that slower new flows reduce the increase in global risk taking. As the Fed tapers its bond purchases through 2014, we would expect this factor to gain momentum and help the USD rise....
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