Morning Market Recap: Treasuries Sell off, Equity Futures Point to Gains

Market Updates | Written by CEP News | Jul 29 08 13:10 GMT |

(CEP News) - Treasury yields are higher along with equity futures on Tuesday despite further writedowns from Merrill Lynch. The U.S. dollar is broadly stronger, except against the CAD, where it is relatively unchanged. Merrill will raise $8.5 billion in a common equity offering after writing off $5.7 billion due to a sale of asset-backed securities. "Yields drifted higher in Asia despite the U.S. bank news, fell in conjunction with UK yields on the poor UK data, but are rising coming into the U.S. session along with a rise in the US dollar and decline in the price of oil," wrote T.J. Marta, fixed income strategist at RBC Capital Markets. U.S. two-year yields are up 4.0 bps to 2.61%, with five-year yields up 4.8 bps to 3.36%, 10-year yields up 5.3 bps to 4.05% and 30-year yields up 5.3 bps to 4.65%. The Eurodollar March 09 contract is down 4.0 ticks to 96.84. The yield curve is steeper, with the 10/2-year spread up 1.2 bps to 143.78 bps. Yields on two-year Canadian government bonds are down 0.8 bps to 3.06%, with five-year yields up 0.8 bps to 3.36%, 10-year yields up 2.0 bps to 3.80% and 30-year yields up 3.1 bps to 4.16%. The December 08 BAX contract is up 1.0 tick to 96.88. The Canadian 10-year note is yielding 25.67 bps less than the U.S. 10-year note. In Germany, returns on two-year German bonds are down 0.8 bps to 4.35%, with five-year yields down 2.6 bps to 4.42%, 10-year yields down 3.4 bps to 4.49% and 30-year yields down 1.9 bps to 4.79%. Yields on UK two-year bonds are down 4.6 bps to 4.88%, with five-year yields down 5.2 bps to 4.85%, 10-year yields down 5.4 bps to 4.90% and 30-year yields down 2.9 bps to 4.56%. U.S. equity market futures are higher with contracts on the Dow Jones Industrial Average up 26 points to 11162, the S&P 500 up 5 points to 1240 and the Nasdaq up 6 points to 1820. European stock markets are mixed, with the Eurostoxx down 1 point to 2825, the UK FTSE 100 up 21 points to 5333 and the German DAX down 24 points to 6327. Asian markets were lower, with the Japanese Nikkei closing down 194 points to 13159 and the Hang Seng Index down 429 points to 22258. Toronto's S&P/TSX composite index closed flat at 13304, the Dow Jones industrial average down 240 points to 11131, the S&P 500 down 23 points to 1234 and the Nasdaq down 46 points to 2264. European stock markets closed in mixed territory with the Eurostoxx down 1 point to 2825, the UK FTSE 100 up 21 points to 5333 and the German DAX down 24 points to 6327. The Canadian dollar is down 0.0003 to 0.9775 against the U.S. dollar (1.0229 USD/CAD) and up 0.36 to 105.44 against the yen. The U.S. dollar is up 0.40 to 107.85 against the yen and the Dollar Index is up 0.196 to 72.845. The euro is down 0.0050 to 1.5691 against the U.S. dollar, down 0.0047 to 1.6050 against the Canadian dollar, up 0.0004 to 0.7898 against the pound sterling and is higher by 0.05 to 169.22 against the yen. The pound sterling is down 0.0072 to 1.9867 against the U.S. dollar and down 0.0067 to 2.0323 against the Canadian dollar. WTI crude oil is down $1.05 to $123.68. The front month gold contract at the Chicago Board of Trade is down $4.50 to $923.30 per ounce. All data taken at 9:01 a.m. EDT. Generated by CEP Newswires, edited by Stephen Huebl, shuebl@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it CEP Newswires - CEP News © 2008. All Rights Reserved. www.economicnews.ca The Copying, Broadcast, Republication or Redistribution of CEP News Content is Expressly Prohibited Without the Prior Written Consent of CEP News. A copy of CEP News disclaimer can be found at http://www.economicnews.ca/cepnews/wire/disclaimer.