Daily Market Color 8/28/2012

Daily Market Color

8/28/2012

Yesterday’s Economic Reports & Headlines:

We had the Dallas FED manufacturing survey beating consensus with its business activity index coming in at (-1.6) Vs. consensus of (-6.0)

Over in Germany, we had the Ifo survey numbers which came in slightly lower than economists estimates, the Ifo survey is a West German business sentiment index

According to Bloomberg, Bundesbank bank head, Jens Wiedmann, is clearly against ECB buying PIIGS government debt and he is against giving any time extension to Greece to meet bailout terms, the Euro is drifting lower as result of the commentary

Today’s Economic Reports & Headlines

June’s S&P Case and Schiller Home Price Index beat consensus, registering a month over month 90bps gain and a year over year gain of 2.3%

We had the US Consumer Confidence report missing consensus coming in at 60.6 Vs. Est 65.8

Japan’s government cut its economic forecast for the first time in a year because of decelerating economic growth in the US and China coupled with European debt issues, the Yen is up 25bps as a result of the report, via Reuters  

Catalonia, the most indebted Spanish region, is expected to apply for $6.3bn in aid from Spain’s liquidity program, via Wall Street Journal

ECB President, Mario Draghi is expected to skip the Jackson Hole Symposium, via Wall Street Journal  

Trades

I will continue to remain long the 10yr Treasury note until the end of this week, but lately I have been questioning whether I should stay in the position during the Jackson Hole conference since commentary from 

Germany, France and Greece are very indicative of another debacle over bailout terms.

Angela Merkel and Jens Wiedmann are opposed to providing Greece a time extension, if Greece is asking for extra time to meet bailout terms then there’s a good chance that the Troika assessment report of Greece finances in early September should be all but pleasant, so, this could lead to renewed speculation of a Greek default

According to The Gartman Letter, France posted its largest month over month increase in unemployment since the depths of the recession and Spain’s highly indebted region of Catalonia is expected to request $6.3bn of aid soon, Europe could cause another period of flight to safety in September and that should be very supportive of treasury prices going forward