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The Day Ahead: Shifting Some Focus from Tradeflows to Events
Yesterday we noted that it was "almost an insult" to look out on the day ahead in terms of the events on the calendar when tradeflows and technicals had so clearly dominated the recent activity. The trading that followed would drive that point home in grand fashion with bond markets doing a complete and brutal 'about-face,' heading to WEAKER levels shortly after the lousy Consumer Confidence numbers.
The reason? Bond market participants were admittedly as short as they've been since 2011. They began covering those shorts even before the consumer confidence data, helping the 1.97 ceiling stay intact in 10yr yields. When the data hit weaker-than-expected, with stocks looking like they'd sell the big miss as well, it prompted another glut of short covering.
Short-covering tends to act like interference that distorts the bigger picture. After the shorts were sufficiently washed away, new, bearish tradeflows emerged en masse, taking yields quickly higher, with a perfectly linear trend of "higher lows." A few minutes of hindsight showed this momentum was clearly aimed at 2.00% technical level, which we noted yesterday as the newly installed wall in the trader's sandbox. While it held up as a supportive ceiling, it also served to remind us that it (the TECHNICAL level) along with what led up to it (the TRADEFLOWS) were in control. Go figure...
For better or worse, that changes today, largely because the data says so. Simply put, the FOMC Announcement has the power to create it's own momentum (or turn away contrary momentum leading up to it). Even the morning events--ADP Employment and Q2 Final GDP--are dissimilar from Tuesday's Consumer Confidence in that regard. Long story short, we're looking for more correlation between events and movement today vs yesterday (though to be clear, tradeflows and techs won't be unimportant, simply less dominant, provided the day's events rise to the occasion).
|
MBS
Live Econ Calendar:
|
|
Week Of Mon, Jan 28 2012 - Fri, Feb 1 2012
|
|
Time
|
Event
|
Period
|
Unit
|
Forecast
|
Prior
|
|
Mon, Jan 28
|
|
08:30
|
Durable Goods
|
Dec
|
%
|
1.6
|
0.7
|
|
10:00
|
Pending sales change
mm
|
Dec
|
%
|
0.6
|
1.7
|
|
13:00
|
2-Yr Note Auction
|
--
|
bl
|
35.0
|
--
|
|
Tue, Jan 29
|
|
09:00
|
Case Shiller Home
Prices (20 City Month-Over-Month)
|
Nov
|
%
|
0.0
|
-0.1
|
|
10:00
|
Consumer confidence
|
Jan
|
--
|
64.0
|
65.1
|
|
13:00
|
5yr Treasury Auction
|
--
|
bl
|
35.0
|
--
|
|
Wed, Jan 30
|
|
07:00
|
Mortgage refinance
index
|
w/e
|
--
|
--
|
4916.7
|
|
07:00
|
Mortgage market
index
|
w/e
|
--
|
--
|
894.8
|
|
08:15
|
ADP National
Employment
|
Jan
|
k
|
165
|
215
|
|
08:30
|
GDP Final
|
Q4
|
%
|
1.2
|
3.1
|
|
13:00
|
7-Yr Note Auction
|
--
|
bl
|
29.0
|
--
|
|
14:15
|
FOMC Announcement
|
N/A
|
%
|
--
|
0.25
|
|
Thu, Jan 31
|
|
07:30
|
Challenger layoffs
|
Jan
|
k
|
--
|
32.6
|
|
08:30
|
Personal income mm
|
Dec
|
%
|
0.8
|
0.6
|
|
08:30
|
Consumption,
adjusted mm
|
Dec
|
%
|
0.3
|
0.4
|
|
08:30
|
Jobless Claims
|
w/e
|
K
|
350
|
330
|
|
09:45
|
Chicago PMI
|
Jan
|
--
|
50.5
|
51.6
|
|
Fri, Feb 1
|
|
08:30
|
Non-farm payrolls
|
Jan
|
k
|
155
|
155
|
|
08:30
|
Unemployment rate mm
|
Jan
|
%
|
7.8
|
7.8
|
|
08:58
|
Markit PMI
|
Jan
|
--
|
55.5
|
54.0
|
|
09:55
|
Consumer Sentiment
|
Jan
|
%
|
71.5
|
71.3
|
|
10:00
|
Construction
spending
|
Dec
|
%
|
0.7
|
-0.3
|
|
10:00
|
ISM Manufacturing
PMI
|
Jan
|
--
|
50.5
|
50.7
|
|
* mm: monthly | yy: annual | qq: quarterly | "w/e" in
"period" column indicates a weekly report
* Q1: First Quarter | Adv: Advance Release | Pre: Preliminary
Release | Fin: Final Release
* (n)SA: (non) Seasonally Adjusted
* PMI: "Purchasing Managers Index"
|
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James Authentic Hermes Bags Handbags bsjuehynb Bowboro Village
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Message:
YOUR MESSAGE HERE
The Day Ahead: Shifting Some Focus from Tradeflows to Events
Yesterday we noted that it was "almost an insult" to look out on the day ahead in terms of the events on the calendar when tradeflows and technicals had so clearly dominated the recent activity. The trading that followed would drive that point home in grand fashion with bond markets doing a complete and brutal 'about-face,' heading to WEAKER levels shortly after the lousy Consumer Confidence numbers.
The reason? Bond market participants were admittedly as short as they've been since 2011. They began covering those shorts even before the consumer confidence data, helping the 1.97 ceiling stay intact in 10yr yields. When the data hit weaker-than-expected, with stocks looking like they'd sell the big miss as well, it prompted another glut of short covering.
Short-covering tends to act like interference that distorts the bigger picture. After the shorts were sufficiently washed away, new, bearish tradeflows emerged en masse, taking yields quickly higher, with a perfectly linear trend of "higher lows." A few minutes of hindsight showed this momentum was clearly aimed at 2.00% technical level, which we noted yesterday as the newly installed wall in the trader's sandbox. While it held up as a supportive ceiling, it also served to remind us that it (the TECHNICAL level) along with what led up to it (the TRADEFLOWS) were in control. Go figure...
For better or worse, that changes today, largely because the data says so. Simply put, the FOMC Announcement has the power to create it's own momentum (or turn away contrary momentum leading up to it). Even the morning events--ADP Employment and Q2 Final GDP--are dissimilar from Tuesday's Consumer Confidence in that regard. Long story short, we're looking for more correlation between events and movement today vs yesterday (though to be clear, tradeflows and techs won't be unimportant, simply less dominant, provided the day's events rise to the occasion).
|
MBS
Live Econ Calendar:
|
|
Week Of Mon, Jan 28 2012 - Fri, Feb 1 2012
|
|
Time
|
Event
|
Period
|
Unit
|
Forecast
|
Prior
|
|
Mon, Jan 28
|
|
08:30
|
Durable Goods
|
Dec
|
%
|
1.6
|
0.7
|
|
10:00
|
Pending sales change
mm
|
Dec
|
%
|
0.6
|
1.7
|
|
13:00
|
2-Yr Note Auction
|
--
|
bl
|
35.0
|
--
|
|
Tue, Jan 29
|
|
09:00
|
Case Shiller Home
Prices (20 City Month-Over-Month)
|
Nov
|
%
|
0.0
|
-0.1
|
|
10:00
|
Consumer confidence
|
Jan
|
--
|
64.0
|
65.1
|
|
13:00
|
5yr Treasury Auction
|
--
|
bl
|
35.0
|
--
|
|
Wed, Jan 30
|
|
07:00
|
Mortgage refinance
index
|
w/e
|
--
|
--
|
4916.7
|
|
07:00
|
Mortgage market
index
|
w/e
|
--
|
--
|
894.8
|
|
08:15
|
ADP National
Employment
|
Jan
|
k
|
165
|
215
|
|
08:30
|
GDP Final
|
Q4
|
%
|
1.2
|
3.1
|
|
13:00
|
7-Yr Note Auction
|
--
|
bl
|
29.0
|
--
|
|
14:15
|
FOMC Announcement
|
N/A
|
%
|
--
|
0.25
|
|
Thu, Jan 31
|
|
07:30
|
Challenger layoffs
|
Jan
|
k
|
--
|
32.6
|
|
08:30
|
Personal income mm
|
Dec
|
%
|
0.8
|
0.6
|
|
08:30
|
Consumption,
adjusted mm
|
Dec
|
%
|
0.3
|
0.4
|
|
08:30
|
Jobless Claims
|
w/e
|
K
|
350
|
330
|
|
09:45
|
Chicago PMI
|
Jan
|
--
|
50.5
|
51.6
|
|
Fri, Feb 1
|
|
08:30
|
Non-farm payrolls
|
Jan
|
k
|
155
|
155
|
|
08:30
|
Unemployment rate mm
|
Jan
|
%
|
7.8
|
7.8
|
|
08:58
|
Markit PMI
|
Jan
|
--
|
55.5
|
54.0
|
|
09:55
|
Consumer Sentiment
|
Jan
|
%
|
71.5
|
71.3
|
|
10:00
|
Construction
spending
|
Dec
|
%
|
0.7
|
-0.3
|
|
10:00
|
ISM Manufacturing
PMI
|
Jan
|
--
|
50.5
|
50.7
|
|
* mm: monthly | yy: annual | qq: quarterly | "w/e" in
"period" column indicates a weekly report
* Q1: First Quarter | Adv: Advance Release | Pre: Preliminary
Release | Fin: Final Release
* (n)SA: (non) Seasonally Adjusted
* PMI: "Purchasing Managers Index"
|
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