Daily Market Commentary
Commentary prepared by Balance Sheet Solutions, LLC, Member FINRA/SIPC
Thursday, March 18, 2010 at 9:00 a.m. CST

 
Market Indications .
.
   
Other Market Indicators
2s/5s Tsy Spread
1.44
-0.00
DJIA-30
10733.67
+47.69
Dollar Idx

80.01

+0.37
2s/10s Tsy Spread
2.71
-0.01
NASDAQ
2389.09
+11.08
CRB Idx
275.53
-0.77
2s/30s Tsy Spread
3.63
-0.03
S&P-500
1166.21
+6.75
 
Today's Market Comments and Strategy.

The price action continues sideways despite some firmer data and no new information vis-a-vis the Fed. Of course, the fact that there are no auctions may be the single most important consideration when judging the price action.   

Yesterday, it was reported that wholesale prices (PPI) fell more steeply than expected in February, declining by 0.6 % (consensus forecast: 0.2%). It was, in fact, the largest decline in seven months. Year-over-year producer prices increased 4.4% (consensus forecast: 4.9%) but slowed from a 4.6 % rise in January. Energy was the primary driver of lower price pressures as gasoline prices plummeted 7.4 %. Stripping out volatile food and energy costs, core producer prices edged up 0.1% last month, slowing from January's 0.3% increase. 

This morning, consumer prices (CPI) were reported at 0.0% (consensus forecast: 0.1%). Excluding food and energy, core CPI came in at 0.1%. Year-over-year CPI at the consumer level has dropped to 1.3% versus 1.6% last month. This represents the lowest year-over-year increase in consumer prices since 2004. Thus the inflation data received over the past two trading days confirms the Fed’s view that inflation remains well under control. 

On a possibly important political note, in terms of the market, we draw your attention to the healthcare vote.  At any moment, the Congressional Budget Office (CBO) will announce how it ‘scores’ the plan.  If it is very rich, it could lose votes; if within boundaries, it will gain some. We have no bias as to how the thing will conclude, but are fairly confident that if it fails, or looks like it will fail, stocks will not like that, bonds will.  

The Treasury is scheduled to announce auctions for $44 billion in twos, $42 billion in fives, and $32 billion in sevens to be held next week. 

In early morning trade, Treasuries are trading higher as the yield curve continues its flattening trend. Equities are unchanged.

 

 

   

March 15-19, 2010: The Week Ahead
Sources: Bloomberg


   
future fed expectations
   
   
 
Select Probabilities based on the Futures
Probability of No Change (0-0.25%) Fed Funds on March 16, 2010
72%
Probability of No Change (0-0.25%) Fed Funds on April 28, 2010
82%

 

**All quoted rates are indications and are subject to change without notice.

* Balance Sheet Solutions, LLC is a member of the FINRA/SIPC.

The information contained herein is prepared by Balance Sheet Solutions, LLC for general circulation and is distributed for general information only. This information does not consider the specific investment objectives, financial situations or particular needs of any specific individual or organization that may receive this report. Neither the information nor any opinion expressed constitutes an offer, or an invitation to make an offer, to buy or sell any securities. All opinions, prices, and yields contained herein are subject to change without notice. Investors should understand that statements regarding future prospects might not be realized. Please contact Balance Sheet Solutions to discuss your specific situation and objectives.