Now raising intellectual capital
I’m just getting a chance to look at the Treasury’s quarterly refunding announcement now, and no surprise here. It’s a record amount at $75 billion that will start to hit the market next week. All the details are here. Its decision to increase TIPs issuance also comes as no surprise after the Wall Street Journal flagged it here.
Given the gains in the Treasury market today on weaker-than-expected data on the service sector, it doesn’t look like the mountain of the supply, with much more to come, is weighing too heavily on the Treasury market. But like many things in the financial markets, it won’t matter until suddenly it does. Improving economic conditions will allow bond investors to narrow their focus back on the supply, but given today’s data, which also included a 371K decline in private sector jobs, and the looming monthly employment report from the BLS on Friday, fears about the economy still rule.
Update: Maybe it is time to worry about supply. Ah, the power of Goldman.
The latest data out on U.S. manufacturing is encouraging to say the least. Coupled with a similar improvement in Europe and it’s easy to get caught up in the giddy feeling that has definitely gripped the stock market.
The Institute for Supply Management reported that its headline U.S. manufacturing index hit 48.9 in July, above expectations and just shy of 50 – the breakeven point between expansion and contraction. New orders and production were both above that threshold, which points to future growth.