Danny Salas

Chico, CA Interest Rates Market Report – Economic Influences – March 3, 2010

We're Above Support Currently

ADP Reports Losses

American Data Processing, which is America’s largest payroll company, reported that we lost 20,000 jobs, in February.  That’s in the Private Sector alone.  The government, generally, hires workers, so that number could be skewed a bit, however, keep in mind that we’re currently having the census bureau hire many Americans to help take statistics all over the country.  That will have an effect on the jobs numbers, too. The revised jobs numbers, for January, were even more alarming.  They revised the 22,000 jobs lost, to a 60,000 jobs lost number.

Yesterday’s Losses

We were in a lock pattern, the last couple of days, and yesterday was a wild roller coaster ride.  We maneuvered below the 100-Day Moving Average, bounced off of the 25-Day Moving Average and ended the day, right where we started.  So, to avoid a heart-attack, locking was more relaxing.  Today, we’ve moved right back down to the 100-Day Moving Average, but so far, we’ve avoided piercing that level of support.

Obama’s Health Care Statement

President Obama is scheduled to talk, today, about the stale-mate that’s currently occurring with Senator Bunning’s consistent objections to the $10 Billion Obama Health Care Plan.  He may indicate that he will file to move ahead with a reconciliation plan that only needs 51 votes, as opposed to 60 votes, in the Senate, for approval.  Bonds may not like these statements, as the United States deficit will have to increase, in order to financial support a bill, like this one.

Signs Point To Floating...However...

Locking Advice

With the Jobs Numbers slated for Friday, this is a tough call.  We have support, at the 100-Day Moving Average, and it’s going to be tough to break through the highs (or lows, for interest rates) of the last six months, so, I would lock.  Even though things could get better, it’s only a chance, and if they do get better, I think it will be for a short time, as investors will realize this, and cash in on their earnings.

Related Must Reads

ADP is O-F-F: A History of Non-Reliable Information
How Moving Averages Effect Interest Rates

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Chico, CA Interest Rates Market Report – Economic Influences – March 2, 2010

Greece's Assurance Of A Resolution Stopped The "Flight To Quality"

Greece’s Resolution

There’s no real economic data scheduled to appear, this morning.  So, the market is moving, primarily from news that their is a financial resolution to Greece’s problems. Basically, they are having to increase taxes, cut government workers’ wages, and other ideas, to help lower their huge deficit.  One suggestion, taken seriously, is requiring taxi drivers to issue receipts, so that they pay their fair share of taxes.  This has caused a nationwide strike and put a huge damper on tourism.  So, you can see how everyone understands that there are sacrifices that need to be taken to rescue and failing economy, it’s just that nobody wants to pay for them.

Locking Advice

Just as anticipated, yesterday, we hit a level that we just couldn’t do much with.  We’d reached the pinnacle of where we could go, without some sort of news that could catapult rates where we haven’t seen in quite some time.  And, actually, we got the news, from Greece, which helped take the “flight to quality” from US Treasuries, back into Stocks, causing rates to increase, slightly.

Related Must Reads

Greece’s Financial Problems

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Chico, CA Interest Rates Market Report – Economic Influences – December 15, 2009

Inflation Readings High On PPI

Inflation Rearing Its Ugly Head

The Producer Price Index (PPI) was significantly higher than expected, at 1.8%, when experts expected a 0.8% reading.  Energy prices was the main reason, however, even after taking out the energy prices, the Core PPI stood at 0.5%.  That’s the highest reading since October of 2008.  This was enough to scare the markets into Bond Values plummeting, and therefore their yields and interest rates increasing about .375% Point compared to pricing, yesterday.  We were able to bounce back, a little bit, so we’ll have to see how the market absorbs this latest reading on inflation.  There’s no real inflation concern, with the exception of this report, so hang in there…let’s see the Consumer Price Index (CPI) reading before we jump to any conclusions…

Open Market Committee Meeting

The Fed starts its two day meeting today.  It will be interesting to see how they read today’s inflation numbers, coupled with tomorrow’s release of the Consumer Price Index.  Tomorrow at 2:15 Eastern, 11:15 a.m., our time, the Fed will speak about what their meeting entailed.  Keep in mind that investors will be listening to every word, trying to determine what their feeling is on the future of the economy.  Rates can move on speculation regarding what the market feel the fed will say, so hold your hat down!

Manufacturing Down – Production & Utilization Up

Something that’s not mentioned too often in my column is the New York Empire State Index.  It’s a reading on manufacturing, and it was the lowest monthly decline ever!  However, Industrial Production and Capacity Utilization were up!  So, given the fact that we’re manufacturing less, production and utilizing employee output is up, therefore, there is room for companies before they start hiring new people.

Locking Advice

At this point, we may as well hope that Bonds can remain above the 100 & 200-Day Moving Averages.  If we fall too far below, things could get ugly, however, let’s hope that inflation, on the consumer level, is not too much of a concern, tomorrow.  I told you it would be a bumpy ride…

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Chico, CA Interest Rates Market Report – Economic Influences – December 11, 2009

Related Must Reads

Wake Up Buyers! A look into why rates will increase in the near future
To Lure Investors, Why Longer Term Treasury Yields Need To “Sweeten The Pot”
Bond Values, Trend Lines, Moving Averages…What Makes Rates Move

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