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8/24/12 Market Color

Daily Market Color

8/24/2012

Yesterday's Economic Reports

· Jobless claims came in higher than expected @ 372k Vs. 365k Est

o The downside surprise gave treasury prices a boost because the negative data is being perceived as one reason, among many, for the FED to provide stimulus on 9/12/12

· New home sales were up 3.6% in July beating consensus coming in @ 372k Vs. 362k, with most of the gains concentrated in the Northeast and Midwest.

o This is a two year high in new home sales

Today's Economic Reports

· Today at 8:30am, we had July's Durable Goods Orders numbers coming in at 4.2% Vs. estimates of 1.9%, however, orders drop 40bps if you exclude transportation orders

o Treasuries rallied on the report, because market players believe this will increase the probability of QE3

· We also had second quarter GDP data that came out from the UK today, the report was in line with consensus; UK's economy dropped 50bps, as a result the Pound is drifting lower

Headlines

· The news was relatively light yesterday. Merkel and Hollande are in talks to find common ground in handling Greece debt woes along with the debt burdens of other peripheral Euro Zone members, according to Bloomberg

o The request for additional time from Greek Prime Minister, Antonis Samaras, may go unanswered until the troika's assessment of Greece's finances

o According to the IMF, Greece will need up to $14bn regardless of Greece receiving an extension to meet their bailout covenants

Trades

· I'll continue to be long treasuries going into next Friday; next week should prove to be eventful because of the following:

o We have two FOMC members speaking on Monday

o US GDP data will be released on Wednesday

And on Thursday we have Jobless Claims and Personal Income and Outlays