Tuesday November 24, 2009 - 18:50:05 GMT
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Treasuries Rise on Strong Bond Auction Demand
U.S. Treasury futures are trading higher after todayâ€™s $42 billion auction received strong demand. The decline in U.S. 3rd Quarter GDP provided support earlier in the trading session. Finally, weaker equity prices also drove up demand for safe-haven assets like the Treasuries. All of this activity points toward perceptions that the U.S. economy is still in a weak state.
Equity futures sold off early in the trading session but have regained almost 50% of the decline. The combination of the weak GDP number and lower consumer confidence helped to encourage selling early in the trading session. Technically, the S&P 500 and the NASDAQ are the weakest markets. Both produced closing price reversal tops last week and both failed to make new highs for the year.
Weaker U.S. equity markets are helping to prop up the Dollar as traders have become more risk averse to higher yielding assets. Trading conditions are thin which makes it difficult to determine if todayâ€™s action is being triggered by holiday liquidation or U.S. economic reports. Nonetheless, the trading action is not normal so beware of possible traps being set by shrewd speculators.
The December Euro is trading mixed today. This morningâ€™s Ifo economic sentiment survey showed that German confidence increased more than economists forecast. This report is providing support for the Euro today. Technically, this market is still struggling with the psychological $1.5000 barrier.
Aversion to risk is helping the Dollar gain against most currencies with the exception of the Japanese Yen. Repatriation is pressuring the U.S. Dollar versus the Japanese Yen. Signs that the U.S. economy is weakening is also giving traders a reason to buy the Yen.
December Gold is holding on to a small gain. Low volume and a slightly better Dollar are keeping bullish traders on the sidelines today.
January Crude Oil is down on weaker stocks and a stronger Dollar. Reports showing the U.S. economy is weakening, is also weighing on crude oil as they suggest that demand should continue to drop.
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