Prices of Treasury coupon securities are posting minimal changes in overnight trading as participants await the monthly labor report.
The consensus anticipates that employers shed 365K jobs in June. The month of May was originally reported at -345K. Economists at UBS believe that we have entered that part of the economic cycle at which the revisions to prior months will reflect the turn in the economy. Consequently,they expect that last month’s figure will be revised to something slightly less onerous.
The unemployment rate will advance and the consensus expects it to hit 9.6 percent.
Today is actually Thursday and so it is also initial unemployment claims day. The consensus projects that the weekly figure will register a small decline to 615K from 627 K last week.
Today is also the day on which the Treasury will announce the details of the multiple coupon auctions planned for next week. The 10 year TIPS auction on Monday should total about $ 10 billion. The 3 year.10 year and 30 year auctions on Tuesday, Wednesday and Thursday should raise about $ 65 billion.
The yield on the 2 year note increased a basis point to 1.05 percent. The yield on the 3 year note edged higher by 2 basis points to 1.56 percent. The yields on the 5 year note, the 7 year note and the 10 year note are unchanged at 2.51 percent, 3.20 percent and 3.54 percent,respectively. The yield on the 30 year bond increased a basis point to 4.34 percent.
Tomorrow the markets are closed to celebrate the 4th of July. Looking out the window here it appears to be a nice day in the New York metropolitan area. If the data do not provide a compelling reason to take risk, market participants will quickly vacate their seats for a weekend of fun and frolic in (hopefully ) the sand and sun.
Forward Rolls
As I mentioned earlier, the Treasury will announce the details of the coupon offerings of next week at 1100AM New York time.
The three year will be a new issue and the roll from the current three year into the WI will be about 7.5 basis points.
WI for those who do not know means "when issued". The security trades on a yield basis until it is actually issued at auction next week. Once the auction process establishes a coupon rate for the bond the wonders of bond math transform that yield into a dollar price.
The 10 year note and the 30 year bond are reopenings of current issues.
