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U.S Market Update

Fri, Aug 21 2009, 15:27 GMT

TradeTheNews.com

- US equity indices are on a tear this morning after a big improvement in July existing home sales, which outpaced expectations to rise 7.2% m/m and hit their highest level since August 2007. Earlier the S&P500 hit fresh 10-month highs above the 1023 handle. Opening Fed's annual symposium in Wyoming, Fed Chairman Bernanke said the US is on the verge of recovery and the global economy is starting to emerge from recession (while also warning challenges remain). The Fed's Bullard added that the economy is on track to see positive growth in 3rd and 4th quarters. Front-month crude briefly traded above $74 to levels not seen since last summer, while natural gas is off lows and making a run for $3

Treasury markets began the day on another positive note, and look primed to finish the week out strongly consolidating a move lower in rates.  But sellers came in after the housing data backing rates up.  The 10-year note is now down nearly three quarters of a point which has pushed the yield back above 3.5%.  The 2-year yield has bounced off that 1% level to trade at 1.065%.

- Capping a week of retail earnings, The Gap managed to narrowly beat analysts' estimates, earning multiple equity rating upgrades. Ann Taylor beat expectations and guided improved sales and earnings for next quarter. Footlocker was well below expectations. Shares of GAP are up 3%, while ANN is down 2% and FL is down nearly 8%. Salesforce.com is up 15% after beating the Street and guiding somewhat higher for the year. CRM's CFO cited some stabilization in demand, but said there has been no improvement in IT spending. In other news, there were press reports that Brazil's Vale has dropped plans to bid up to $25B for Mosaic, due to government pressure.

- The currency price action remains dependent upon the direction of equities markets. Rising risk appetite was initially fueled by European PMI data earlier today and has been sustained by the US homes sales data. Both the USD and JPY were softer against the European and commodity-related pairs as a result.

Published on  Fri, Aug 21 2009, 15:28 GMT