S&P 2,097.76 -0.13% | US10Y-Bund 181bps | US10Y 1.91% +2bps | €/$ 1.073 -0.04% | 30YFRM 3.73% -5bps (MoM) | WTI Crude ($/bbl) 55.26 -1.99% | COMEX Copper ($/lb) 2.702 -1.01% | HY Spread: 3.95% | Trm Premium: 0.499% [@7:00pm]
Not much news on the economic calendar today. Bill Gross calls the German 10Y Bund the short of the year, and adds that it acts as an anchor on the the US10Y. With a current spread of around 180bps, I’d say that the Bund’s richness has been dogging my initial projection of 200bps on the US10Y by late March.
Existing home sales numbers for March come out tomorrow. February showed moderate improvement from January, although at an annual pace 4.88M, it has been below stronger readings from late 2014 of above 5.00M. A number at the upper range of consensus, say 5.2M could put a little pep in the US10Y, but existing home sales are more a marker of going forward confidence than immediate climate. Consumer confidence looks good for Q2/Q3 – that won’t impact the US10Y much in the next week, although a good reading does bode well for consumption going forward.
Tomorrow we’ll get jobless claims at 8:30, and durable goods orders on Friday. Jobless claims have been decent, consistently on a 4-week average of around 280K. This hasn’t translated to much movement in the US10Y. A strong reading of 200K or something like that would push the US10Y up. Durable goods orders, a measure of factory activity going forwards, have been weak and the core consensus is around 0.3%. PPI-FD, which came in last week at 0.3% MoM, won’t have much real adjustment effect on durable goods (a nominal measure). A strong reading, again, might have some slight upkick on the US10Y, but as far as the next week goes, the case will likely be moderate growth and little effect on the near future.