Weak retail sales and consumer confidence data this week created a huge appetite for bond buyers. $75 billion in US bonds were well covered creating a rise in bond prices and fall in bond yields.
Investor consensus is that the US consumer is not in a position, or has the desire to spend aggressively as in prior recession recovery periods. This should enable the treasury to complete its remaining bond sales in the next few months without much difficulty, as institutional investors will seek the safety of bonds.
Crude broke $68 support on the poor consumption data. Traders long on commodity play currencies were forced to sell their long positions and buy the dollar, causing the dollar to close the week strong vs the euro.
This week look for crude to try to carve out support in the $65 area. Barring any hurricanes arriving in the gulf this week, gas and distillate futures will also seek the least resistant path lower.
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