Wednesday Interest Rate Brief
Andrew Wilkinson submits: Despite a strong reading from the ADP employment report on Wednesday there are a couple of dampeners to cause a bid to fixed income prices. Earlier enthusiasm for a lasting solution to the Eurozone sovereign debt crisis took a ding following comments from a German official while a reminder of the lingering crisis came in the form of an Irish downgrade. The one-sided Egyptian political crisis took a peculiar turn in light of President Mubarak’s announcement that he wouldn’t seek reelection in September when thousands of his supporters clashed with opponents in Cairo. Scenes of running battles reminded investors of risks to peace and therefore the secure flow of trade via the Suez Canal. Bonds spiked as attention was drawn to the pitch battles on the Cairo streets.
Eurodollar futures – There is little to drive treasury prices midweek and after Tuesday’s rise in yields, bond buyers have emerged to keep prices in check. An ADP report says that US employers added 187,000 jobs in January and is a second strong showing from the private payroll provider. Treasury futures saw gains accelerate shortly after the report sending the March contract to as high as 120-22. The December reading was revised lower by 50,000 jobs to 247,000. Last month’s first estimate spurred hopes of a strengthening labor market. The yield fell to 3.40%. Eurodollar prices were mixed and either side of unchanged along the strip. The ADP report still projects a far bigger gain than most economists predict for Friday whereComplete Story »
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