Noon Report
Today’s Releases
MBA Mortgage Applications: 3.8% vs. 0% prior
Oct. ADP Employment: 106k vs. 61k prior revised
Q3 GDP Annualized: 3.9% vs. 3.8% prior
Q3 GDP Price Index: 0.8% vs. 2% prior
Core PCE (Q/Q): 1.8% vs. 1.5%
Personal Consumption: 3% vs. 3.2% prior
Q3 Employment Cost Index: 0.8% vs. 0.9% prior
Sept. Construction Spending: 0.3% vs. -0.2% prior revised
Oct. NAPM-Milwaukee: 63 vs. 70 prior
2:15e: FOMC Rate announcement: 4.5% expected
*the number sometimes comes out a little before or after 2:15e
US Treasury: short-dated maturities to help fill unexpected funding needs
The US Treasury notes an “unprecedented” variation in rates as well as demand for short-dated maturities. The Treasury said it would put more focus on short-dated maturities to fill the funding needs of the government. A Treasury official said the short end of the curve is closely analyzed when there are near-term changes in receipts or outlays. Treasury has lowered the minimum purchase amounts for Treasury auctions to $100 from $1000.
SEC examining Goldman’s Q3 results
The SEC is investigating Goldman Sachs after they reported an 88% jump in Q3 profits. Goldman avoided extensive Q3 losses linked to subprime by taking short mortgage positions. The SEC would like to examine whether or not Goldman withheld information as to the extent of the mortgage crisis in order to corner the market.
FOMC Preview
Oct. FED Fund Futures show a 92% chance the FED will cut 25 BPS and an 8% chance the FED will leave rates unchanged when the FOMC announces rates. A 25 BPS cut is widely expected and has been built into the market to some extent. If the FED cuts 50 BPS equities should enjoy a surge and the USD is likely to sell-off. If the FED leaves rates unchanged equities are likely to sell off, however, would indicate potential good news for the US economy going forward. If adverse effects from the credit crunch have been indeed “forestalled” the FED may hold the line.
US Treasury/ Fixed Income
The FED added $5.5 bln in overnight REPOS; FED Funds are trading at 4.75%.
Bonds are lower across the board helped by the better than expected Q3 GDP data.
30-yr. yield: up .0199 to 4.69%
10-yr. yield: up .0252 to 4.4%
2-yr. yield: up .0248 to 3.83%
6-month yield: down .08 to 3.98%
3-month yield: down .11 to 3.84%
4-week yield: down .09 to 3.93%
Equities
Equities have been in positive territory all day, helped by today’s GDP data.
DOW Futures: up 65 to 13889
S&P Futures: up 12.5 to 1548.25
Nasdaq Futures: up 17 to 2234
Forex
The USD is lower vs. most major currencies; hitting new record lows vs. the EUR and in the USD Index.
USD Index down .17% to 76.669
EUR/USD up .22% to 1.4465
USD/JPY up .5% to 115.23
Cable up .5% to 2.0780
USD/CHF flat at 1.1585
USD/CAD down .44% to .4597
Commodities
Energies got a boost from an unexpected drop in crude supplies. Metals are higher across the board.
Crude up 3.3% to 93.37
Unleaded up 3% to 232.45
Heating Oil up 3% to 249.87
Natural Gas up 2.5% to 8.22
Gold up .7% to 793.20
Silver up .89% to 14.45
Platinum up .74% to 1451.50
Copper up .2% to 348.65