Market Analysis

US Treasury notes are improved in early morning trading. Mortgage-backed securities issued by Fannie Mae and Freddie Mac are positive but are not moving with the same momentum as US Treasury notes. Despite the downgrade of US sovereign debt by S&P (from AAA to AA+), investors are purchasing US Treasury notes. Analysts disagree on the possible impact of a downgrade by S&P. Given that just one rating agency has downgraded US debt, the impact is muted. Last Monday, Moody's re-affirmed its AAA rating for US debt. Fitch today announced that their review of the US debt rating will be complete by the end of August.

The economic calendar is very light this week. The major events will be the Below is a recap:

Monday - economic calendar is vacant

Tuesday, August 9 2011

• 2nd Qtr Preliminary Productivity and Unit Labor Costs - Productivity is expected to have dropped by .6% vs up 1.8% in the 1st Qtr. Unit Labor Costs are expected to have increased by 2.2% vs up .7% in the 1st Qtr.
• US Treasury 3yr Note Auction - analysts will continue to monitor demand for US Treasuries, particularly after the S&P downgrade.
• Federal Reserve Open Market Committee (FOMC) post meeting statement.

Wednesday, August 10, 2011

• June Wholesale Inventories - expected up 1.0% vs up 1.8% in May
• July Treasury Budget - expected monthly deficit of $132 billion vs $165 billion deficit in June
• US Treasury 10 yr Note Auction

Thursday, August 11, 2011

• Initial Jobless Claims for the week ended 8/6/11 - expected at 409,000 vs 400,000 the prior week.
• June Trade Balance - expected trade deficit of $48 billion vs $50.2 billion in May
• US Treasury 30 Yr Bond Auction

Friday, August 12, 2011

• July Retail Sales - expected up .5% vs up .1% in June. Excluding the automotive segment expected up .2% vs unchanged in June.
• Univ of Michigan initial August Consumer Sentiment - expected 62.5 vs 63.7 in July
• June Business Inventories - expected up .5% vs up 1% in May