Chillin' out till it needs to be funded
Conventional Thursday announcements for 2 yr, 5 yr and 7 yr notes to be auctioned on Monday, Tuesday and Wednesday are in from the Treasury for $35 bln, $20 bln and $29 bln respectively That s a lot of paper but the way Foreign demand has shot up in November shows how data watching muct be careful unlike market sentiments riding on each number.
October’s poor showing in Foreign Treasury demand with a $48 bln contraction in withdrawals from short term paper (more significant as the world is always happier with th e short term investment and that sentiment underwrites their vote of confidence or otherwise in most corporates and sovereigns, incl a very low investment rate of $4.8 bln in long term paper is all but ignored.
The response to the latest 5 year TIPS auction would be out in under an hour, but the decline in jobless claims is finally showing the number unstuck from the 400k 2011 normal with more than 15,000 claims lost for the second successive week to 366k this week
UPDATE: The $12bln issue of TIPS went for another record 3.01 Bid Cover ratio with the coupon of 0.125% and Foreign Investors picked up 58% of the inssue, with Dealers ponying up for only 42%. As the April Bonds were reissued, 4 yr 4 months is left on maturity and the Yield was -0.877%
Industrial Production is also better despite the 0.2% MOM contraction mainly as the October jump in Auto productioon by 3.1% would be compensated. The Annual IIP is thus above 4% yet and has been holding that for six months having slowed down from 8% levels in mid-2010
More importantly the Empire state and Philly Fed Indices have both come at 10.3 from 3.6 in November, both maintaining growth in New Orders and Employment ( a positive 3.6 in the New York index) while dumping unfilled orders to give companies a cause for worry. Capacity Utilization in the Production indices is still 77.8% its highest in some time.
The PPI is a hefty 5.9% yearly and 2.9% excluding Food and Energy thourgh costs for energy in gasoline fell for the month and the Current Account data showed the best deficit number in years at $110 bln as the Trade Gap slowedd own for both US and Europe from slowing imports (demand contraction in Energy is happening over a longer term as well as more kicks in if prices rise 20% but the latter is deflationary)