Daily Market Color 8/27/2012

Daily Market Color

8/27/2012

Today’s Economic Reports

Today we have the Dallas FED manufacturing survey coming out at 10:30am, economist are expecting a 6 point decline in business activity

At 12:15pm and 6:15pm we have two FOMC (Federal Open Market Committee) members speaking, market participants are anxiously awaiting their commentary on monetary easing

Headlines

Europe is turning into a waiting game. Markel and Hollande are waiting for the Troika’s assessment of Greece before deciding whether or not they should ease bailout terms; the report of that assessment is expected to be released in early September

If Greece is granted the extension then either two things would need to happen: 1. Greece will need more bailout funding or, 2. Greece’s bailout terms will have to be restructured, a restructuring of the terms should lead to another prolong period of uncertainty    

On the other hand, the European Central Bank is waiting for Germany’s court ruling on the legality of the ESM before providing details on their bond buying program

Germany court ruling is expected to be on 9/12/12, while the ECB policy announcement is on 9/6/12; since the ECB is going to wait for the ruling before elaborating on their bond buying plans, this indicates that the ball is in Germany’s court 

Trades

All of the uncertainty listed above coupled with the highly anticipated Jackson Hole Symposium, should be supportive of treasury prices in my opinion. We will continue to be long the 10yr Treasury note until the end of this week