Treasuries opened mostly flat yesterday, before weak July retail sales data sent bonds higher. The headline number posted -.1% for July, compared to +.8% expected. Stripping out autos the number was still a disappointment, -.6% compared to +.1% expected. The biggest contributor to the upside was from the automotive sector, which was not surprising considering the popularity of the cash for clunkers program, but was more than offset by weakness in gas station and building materials sales.
Bonds leveled off mid-morning before the strong auction results boosted prices going into the afternoon. $15 billion of 30-year bonds were sold at a high yield of 4.541%, with a bid/cover of 2.54. The bid/cover is the ratio of bids to the amount actually sold to bidders, and is used as a gauge of demand. Yesterday’s auction was considered strong compared to an average of 2.43 over the past four 30-year auctions.
As I write July CPI has just posted no change MoM and +.1% Ex Food & Energy, in line with expectations. Bonds have rallied on the news. More on this number on Monday.
Cliff J. Reynolds Jr., Investment Analyst
Bonds leveled off mid-morning before the strong auction results boosted prices going into the afternoon. $15 billion of 30-year bonds were sold at a high yield of 4.541%, with a bid/cover of 2.54. The bid/cover is the ratio of bids to the amount actually sold to bidders, and is used as a gauge of demand. Yesterday’s auction was considered strong compared to an average of 2.43 over the past four 30-year auctions.
As I write July CPI has just posted no change MoM and +.1% Ex Food & Energy, in line with expectations. Bonds have rallied on the news. More on this number on Monday.
Cliff J. Reynolds Jr., Investment Analyst
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