Treasuries came under pressure yesterday following a disappointing 3-year auction and on speculation that the European Union will, in fact, step in to provide financial assistance to Greece.
The Treasury will auction off $81 billion in additional notes this week, starting with today’s sale of $40 billion 3-year notes. The 3-year note has recently been a particular favorite of foreign central banks who have represented about 49% of bids at the last few 3-year auctions.
Also, the Treasury will be auctioning $81 billion in longer-term Treasuries which will add pressure to any interest rate improvement this week.
The highly anticipated monthly jobs report was released today. January saw job losses of 20,000 and did not turn positive as expected.
Bonds traded lower yesterday after the ADP Employment Change Index (Jan), declined by -22k, less than the -30k expected while the December revision improved by over 20k.
Mortgage applications increased 21% for the week ending January 29th, with the purchases increasing 10.3% and refinance activity increasing 26.3%.
U.S. Treasuries are little changed on the December Pending Home Sales release. Today’s December Pending Home Sales were expected to show an increase of +1.0% month over month after seeing a plunge of -16% in November because of the expiration of the home buyer credit, which ended up getting extended to April 30, 2010.
The fourth quarter gross domestic product growth report revealed that the economy has actually been expanding faster than previously predicted. The U.S. economy grew at a 5.7% annual pace, which is the fastest pace in over six years.
Yesterday, Treasuries ended slightly higher on some flight to quality related to economic worries, lifting prices. Today mortgage bonds are trading sharply lower giving back yesterday’s gains. This is because of better than expected Q4 GDP data which showed the economy grew at a 5.7% annualized pace.
Treasury prices fell yesterday after the Fed confirmed its intention to withdraw from stimulus measures put in place to lift the economy.