Today's Market Focus

[setravis]

Tuesday, November 30, 2010...

Today's Market Focus

•   December 10-year T-notes this morning are trading up +10.5 ticks. T-note prices yesterday traded sideways to higher the entire day on increased safe-haven demand due to fears of contagion from the European debt crisis: TYZ10 +8.5, FVZ10 +3.7, EDH11 +0.5.

               Bullish factors included (1) concern that the approved 85 billion euro ($113 billion) aid package for Ireland will fail to stem the contagion of the European debt crisis after credit-default swaps to insure Spain's and Portugal's government debt rose to record highs, (2) the action by the Fed to buy $7.226 billion of Treasuries as part of its quantitative easing program, and (3) the prediction from RBC that the action by European finance ministers to give Greece an extra 4-1/2 years to repay its bailout package shows the scale of Europe's debt crisis is greater than government initially acknowledged. A bearish factor yesterday was an initial reduction in safe-haven demand for Treasuries after European governments agreed on an 85 billion euro bailout for Ireland.


•   The dollar index this morning is trading highr and at a 2-1/4 month high with the dollar/yen -0.43 yen and the euro/dollar -1.09 cents as concerns over the widening of the European debt crisis boosts the safe-haven demand for the dollar. The dollar index yesterday strengthened throughout the day on increased safe-haven demand due to concern that the European sovereign-debt crisis will broaden: Dollar Index +0.478, USDJPY +0.153, EURUSD -0.0121. The euro fell to a 2-1/4 month low against the dollar and the yen slumped to a 2-month low.

                Bullish factors for the dollar included (1) the slump in the euro to a 2-1/4 month low against the dollar on concern the European debt crisis will spread to Spain and Portugal after credit-default swaps to insure Spain's and Portugal's government debt rose to record highs, and (2) a report from the European Commission that predicts GDP growth in the Euro-Zone next year will fall to 1.5% from 1.7% this year as budget cuts to stem the debt crisis hurt consumer demand.

                Bearish factors for the dollar include the larger than expected increase in the Nov Euro-Zone economic confidence which rose to a 3-year high and is euro positive, and (2) comments from EU Economic and Monetary Affairs Commissioner Rehn who said the Euro-Zone economy faces an "upside risk" from the strength in the recovery in Germany.


•   January crude oil prices this morning are trading -29 cents a barrel and January gasoline is -1.24 cents per gallon. Crude oil and gasoline prices yesterday moved higher on optimism that an increase in holiday sales signals the economy and energy demand may strengthen: CLF11 +$1.97, RBF11 +6.34. Jan crude and Jan gasoline climbed to 2-week highs.

                Bullish factors included (1) data from the National Retail Federation that showed US shoppers over the Thanksgiving weekend increased purchases by +6.4% over the 2009 period, a sign of a stronger economy, and (2) the prediction from the US Climate Prediction Center that temperatures in the eastern half of the US will be below normal from Dec 6 to Dec 12, which may prompt stronger demand for heating fuels.

                Bearish factors included (1) the rally in the dollar index to a 2-1/4 month high, which reduces the investment demand for commodities, and (2) weakness in f=global equity markets which reduces confidence in the global econo mic outlook.

[setravis]

Wednesday, December 1, 2010...

Today's Market Focus

•   March 10-year T-notes this morning are trading down -18.5 ticks as a rally in global equities reduces the safe-haven demand for Treasuries. T-note prices yesterday traded higher throughout the day on increased safe-haven demand due to fears of contagion from the European debt crisis: TYH11 +6, FVH11 +5.7, EDM11 -2.0.

                Bullish factors included (1) concern over contagion in the European debt crisis after credit-default swaps to insure Italian, Spanish and Portuguese government bonds all rose to record highs, (2) the Fed's action to purchase $6.81 billion of Treasuries as part of its QE2 asset purchase program, and (3) the weaker-than-expected Sep S&P/CaseShiller composite-20 home price index (-0.8% m/m and +0.6% y/y versus expectations of -0.4% m/m and +1.0% y/y).

                Bearish factors included (1) the unexpected increase in the Nov Chicago purchasing mangers index which expanded at its fastest pace in 7 months (+1.9 to 62.5 versus expectations of -0.7 to 59.9), (2) th e larger-than-expected increase in the Nov US consumer confidence which climbed to a 5-month high (+4.2 to 54.1 versus expectations of +2.8 to 53.0), and (3) a slight decrease in the safe-haven demand for Treasuries after the stock market came off of its lows in the afternoon.


•   The dollar index this morning is trading weaker with the dollar/yen +0.12 yen and the euro/dollar +1.25 cents. The dollar index yesterday rallied for a third day on concern that the European sovereign-debt crisis may widen: Dollar Index +0.360, USDJPY -0.576, EURUSD -0.01461. The dollar index climbed to a 2-1/4 month high and the euro slid to a 2-1/2 month low against the dollar.

                Bullish factors for the dollar included (1) the slump in the euro to a 2-1/2 month low against the dollar on concern over contagion of the European sovereign-debt crisis after credit-default swaps insuring Italian, Spanish and Portuguese government bonds all rose to record highs, (2) the +0.1 point increase in the Oct Euro-Zone unemployment rate to a 12-year high of 10.1%, which is euro negative, and (3) the larger-than-expected increase in Nov US consumer confidence to a 5-month high along with the unexpected increase in the Nov Chicago purchasing managers index to a 7-month high, which sugg ests strength in the US economy.

                Bearish factors for the dollar include (1) comments from ECB President Trichet who said the Euro-Zone economy is growing "better than forecast" and that the EU's resolve on the euro "shouldn't be underestimated," and (2) comments from IMF First Deputy Managing Director Lipsky who said the euro has a "solid" value and any notion that the currency was under threat was "wildly exaggerated."


•   January crude oil prices this morning are trading +$1.30 a barrel and January gasoline is +5.22 cents per gallon. Crude oil and gasoline prices yesterday fell as the dollar gained on concern the European sovereign-debt crisis is spreading: CLF11 -$1.62, RBF11 -3.76. Jan gasoline rose to a 2-week high but erased its gains and finished lower.

                Bearish factors included (1) the rally in the dollar index to a 2-1/4 month high, which reduces the investment demand for commodities, (2) concern that the European debt crisis will spread and undercut the global economy and energy demand, and (3) concern that the US housing crisis may linger and limit fuel demand after the Sep S&P/CaseShiller composite-20 home price index fell for a third month.

                Bullish factors included (1) the larger-than-expected increase in Nov US consumer confidence to a 5-month high along with the unexpected increase in the Nov Chicago purchasing managers index to a 7-month high, which indicates the econ omy may strengthen and improve fuel demand, and (2) the outlook for a fall in weekly crude supplies when the DOE releases weekly crude oil inventory figures on Wed. Expectations for Wednesday's weekly crude inventories from the DOE are for crude oil supplies to fall -1.1 million bbl, gasoline stockpiles to gain +625,000 bbl, distillate inventories to drop -1.1 million bbl and the refinery capacity rate to rise +0.4 to 85.9%.

[setravis]

Thursday, December 2, 2010...

Today's Market Focus

•   March 10-year T-notes this morning are trading down -5.5 ticks. T-note prices yesterday plummeted to a 2-1/2 month low on reduced safe-haven demand as the stock market rallied sharply after European debt concerns eased and US economic data was stronger than expected: TYH11 -1-9/32, FVH11 -25.5, EDM11 +2.5. The yield on the 10-year T-note rose to a 4-month high of 2.979%.

                Bearish factors included (1) reduced safe-haven demand for Treasuries after global stock markets rallied sharply as European debt concerns eased and after Nov Chinese manufacturing activity expanded at its fastest pace in 7 months, (2) the biggest monthly increase in Nov ADP employment in 3 years along with the upward revision to Oct (Nov +93,000 versus expectations of +70,000 and Oct revised up to +82,000 from the earlier reported +43,000), (3) the smaller-than-expected decline in the Nov ISM manufacturing index (-0.3 to 56.6 versus expectations of -0.4 to 56.5), and (4) the Fed's Beige Book whic h said the US economy gained strength in 10 of 12 regions as manufacturing "continued to expand in most districts" and hiring and retail spending "showed improvement" in most districts..

                Bullish factors included (1) comments from Richmond Fed President Lacker who said he's "not sure" if monetary tightening is around the corner and he doesn't see "high odds" of tightening next year, and (2) the action by the Fed to purchase $8.174 billion of Treasuries as part of its QE 2 asset-purchase program to stimulate the economy.



•   The dollar index this morning is trading lower with the dollar/yen +0.01 yen and the euro/dollar +0.25 cents. The dollar index yesterday weakened on speculation the US would support more IMF aid for the European sovereign-debt crisis and on reduced safe-haven demand after global stock markets rallied sharply: Dollar Index -0.482, USDJPY +0.500, EURUSD +0.01558.

                Bearish factors for the dollar included (1) strength in the euro on speculation the ECB at its monthly meeting Thursday may indicate further measures to curb the spread of the debt crisis, (2) a report from Reuters that cited an unidentified US official who said the US would support increasing the size of the EU's rescue fund through the commitment of more money from the IMF, and (3) comments from Richmond Fed President Lacker who said he's "not sure" if monetary tightening is around the corner and he doesn't see "high odds" of tightening next year.

                The main bullish factor for the dollar yes terday was stronger-than-expected US economic data on Nov ISM manufacturing and Nov ADP employment, which signals strength in the US economy.



•   January crude oil prices this morning are trading down -11 cents a barrel and January gasoline is up +1.08 cents per gallon. Crude oil and gasoline prices yesterday rallied sharply on a weaker dollar, strong Chinese manufacturing activity and reduced European debt concerns: CLF11 +$2.64, RBF11 +9.71. Jan crude climbed to a 2-week high and Jan gasoline surged to a 6-3/4 month high.

                Bullish factors included (1) a weaker dollar, (2) speculation the ECB will act to prevent further contagion of the European sovereign-debt crisis when it meets Thursday, (3) the Nov China PMI manufacturing index which rose more than expected to its fastest pace in 7 months, and (4) the Nov ADP employment change which showed the biggest monthly increase in jobs in 3 years and boosts confidence in the economy and energy demand.

                Bearish factors included (1) the unexpected increase in weekly crude oil inventories (+1.07 million bbl versus expectations of -1.1 million bbl), and (2) snowstorms an d adverse weather throughout Europe that has disrupted air travel and limited auto travel, which may reduce fuel demand, and (3) the official end of the third-most active Atlantic hurricane season in history, according to the National Hurricane Center, which left the US unscathed and failed to disrupt crude or refinery production in the US Gulf coast.

[setravis]

Friday, December 3, 2010...

Today's Market Focus

•   March 10-year T-notes this morning are trading down -1.5 ticks. T-note prices yesterday sank to a 4-month low after Oct pending home sales increased at a record pace and the stock market rallied to 3-week highs: TYH11 -12.5, FVH11 -7.2, EDM11 +2.5. The yield on the 10-year T-note rose to a 4-month high of 3.024%.

                Bearish factors included (1) the unexpected increase in Oct pending home sales which had their biggest gain since data began in 2001 (+10.4% versus expectations of -0.9%), and (2) reduced safe-haven demand for Treasuries after the stock market rallied to 3-week highs.

                Bullish factors included (1) the larger-than-expected increase in weekly initial unemployment claims (+26,000 to 436,000 versus expectations of +17,000 to 424,000), (2) increased safe-haven demand for Treasuries after the ECB refrained from announcing additional measures to combat the European sovereign-debt crisis, and (3) the action by the Fed to purchase $8.309 billion of Treasuries as p art of its QE 2 asset-purchase program.



•   The dollar index this morning is trading lower with the dollar/yen -0.20 yen and the euro/dollar +0.55 cents. The dollar index yesterday moved lower for a second day on reduced safe-haven demand after Oct US pending home sales unexpectedly rose and the stock market rallied: Dollar Index -0.410, USDJPY -0.387, EURUSD +0.00686.

                Bearish factors for the dollar included (1) the unexpected surge in Oct US pending home sales which rose to a record, and (2) the rally in the S&P 500 to a 3-week high, which reduced the safe-haven demand for the dollar.

                Bullish factors included (1) early weakness in the euro after ECB President Trichet said the ECB will delay its withdrawal of emergency liquidity measures to combat "acute" market tensions and disappointment that the ECB signaled no further new measures to stem the debt crisis, and (2) the surge in Treasury yields to a 4-month high, which improves the dollar's interest rate differentials.



•   January crude oil prices this morning are trading up +9 cents a barrel and January gasoline is -0.49 of a cent per gallon. Crude oil and gasoline prices fluctuated on either side of unchanged yesterday until the dollar sold-off after mid-morning which prompted a rally in energy prices into the close: CLF11 +$1.25, RBF11 +4.89. Jan crude posted a 2-1/2 week high and Jan gasoline climbed to a 6-3/4 month high.

                Bullish factors included (1) a weaker dollar, (2) the action by the ECB to delay the withdrawal of its stimulus measures, and (3) strength in US retail sales after Retail Metrics reported that Nov US comparable store sales rose more than expected, which indicates strength in the economy that may lead to increased fuel demand.

                Bearish factors included (1) the prediction from tanker-tracker Oil Movements that OPEC will increase crude shipments by +0.4% to 23.56 million barrels a day in the four weeks to Dec 18, and (2) the larger-than-expected increase in weekly US initial unemployment claims, which questions the sustainability of the economic recovery and energy demand.

[setravis]

Monday, December 6, 2010...

Today's Market Focus

•   March 10-year T-notes this morning are trading up +15.5 ticks after Fed Chairman Bernanke suggested the possibility of addtional Fed easing. T-note prices last Friday rallied sharply from a 4-month low on weaker-than-expected Nov nonfarm payrolls and then spent the rest of the day oscillating in positive territory: TYH11 +6, FVH11 +11, EDM11 +7.0.

                Bullish factors included (1) the smaller-than-expected increase in Nov nonfarm payrolls (+39,000 versus expectations of +145,000), (2) the unexpected increase in the Nov unemployment rate which rose to its highest level in 7 months (+0.2 to 9.8% versus expectations of unchanged at 9.6%), (3) the unexpected decline in Nov manufacturing payrolls which have now fallen for 4 consecutive months (-13,000 versus expectations of +5,000), and (4) a lack of wage pressures after Nov avg hourly earnings rose less than expected (unchanged m/m and +1.6% y/y versus expectations of +0.2% m/m and +1.7% y/y. Limiting gains in Treasury pri ces was the larger-than-expected increase in the Nov ISM non-manufacturing index, which expanded at its fastest pace in 6 months (+0.7 to 55.0 versus expectations of +0.5 to 54..



•   The dollar index this morning is trading higher with the dollar/yen +0.29 yen and the euro/dollar -1.13 cents. The dollar index last Friday plummeted to a 1-1/2 week low following the weak Nov US payrolls report and finished the day sharply lower: Dollar Index -0.926, USDJPY -1.097, EURUSD +0.0204.

                Bearish factors for the dollar included (1) the smaller-than-expected increase in Nov nonfarm payrolls along with the unexpected increase in the US unemployment rate to a 7-month high of 9.8%, which fuels speculation that the economic recovery is faltering, and (2) strength in the euro after Oct Euro-Zone retail sales came in stronger than expected along with the action by the Bundesbank to hike its GDP forecasts for Germany for this year and next.

                Bullish factors included (1) the stronger-than-expected Nov ISM non-manufacturing index which expanded at its fastest pace in 6 months, and (2) the action by Goldman Sachs to push back its forecast for the ECB's first interest ra te increase to Q4 of next year from an earlier estimate of Q3 along with its prediction that the ECB may increase its purchases of government bonds to ensure that the European sovereign-debt crisis abates.



•   January crude oil prices this morning are trading -18 cents a barrel and January gasoline is +0.14 of a cent per gallon. Crude oil posted a 26-month high in overnight trade before falling back. Crude oil and gasoline prices last Friday gyrated on both sides of unchanged early but a weaker dollar trumped a weak payrolls report and prices finished mixed: CLF11 +$1.19, RBF11 -0.32. Jan crude climbed to a 25-month high.

                Bullish factors included (1) the slide in the dollar index to a 1-1/2 week low, which boost investment demand for commodities, (2) the stronger-than-expected Nov ISM non-manufacturing index which expanded at its fastest pace in 6 months and indicates increased energy consumption, and (3) the prediction from JPMorgan Chase that OPEC is unlikely to increase crude oil production next year unless prices surge through $100 a barrel and that crude prices will advance to $120 a barrel by 2012 as consumption grows in emerging economies.

                The main bearish factor last Friday was the smaller-than-expected increase in Nov nonfarm payrolls along with the unexpected increase in the US Nov unemployment rate to a 7-month high of 9.8%, which questions the sustainability of the economic recovery and energy demand.

[setravis]

Tuesday, December 7, 2010...


Today's Market Focus


.   March 10-year T-notes this morning are trading down -15.5 ticks on reduced safe-haven demand as stock prices rally. T-note prices yesterday moved higher the entire day after Fed Chairman Bernanke suggested the Fed may increase its debt purchases: TYH11 +22.5, FVH11 +16.5, EDM11 +2.0.

                Bullish factors included (1) comments from Fed Chairman Bernanke who said that Fed asset purchases beyond the $600 billion already announced are "possible" given that US unemployment may take 5 years to fall to a "normal" level of 5 to 6%, and (2) increased safe-haven demand for Treasuries on concern over contagion in the European sovereign-debt crisis after Moody's Investors Service cut Hungary's sovereign credit rating two levels to Baa3 with a negative outlook.

                Bearish factors included (1) reduced safe-haven demand for Treasuries after Fed Chairman Bernanke said a return to recession "doesn't seem likely," and (2) supply pressures ahead of the Treasury's $32 billion auction of 3-year T-notes on Tuesday.
The dollar index this morning is trading lower with the dollar/yen -0.07 yen and the euro/dollar +0.58 cents.



.  The dollar index yesterday closed higher as the euro weakened after European governments showed division about how to contain the debt crisis: Dollar Index +0.194, USDJPY -0.058, EURUSD -0.01051.

                Bullish factors for the dollar included (1) comments from Fed Chairman Bernanke who said a return to recession "doesn't seem likely," (2) the euro negative action by Moody's Investors Service to cut Hungary's sovereign credit rating two levels to Baa3, its lowest investment grade with a negative outlook on concern the government's policy of plugging holes with "temporary measures" won't be sustainable, and (3) possible divisions among European leaders on how to contain the debt crisis after the Belgian finance minister said the 750 billion-euro ($1 trillion) EU bailout fund might be expanded, while Germany said it opposes any increase.

                Bearish factors included (1) the suggestion from Fed Chairman Bernanke that Fed asset purchases beyond the $600 billion already announced are "certainly possible" because of the stubbornly high US unemployment rate, and (2) jawboning from Bank of France Governor and ECB Council member Noyer who said the euro is a little bit overvalued against the dollar.
January crude oil prices this morning are trading +$1.02 a barrel and January gasoline is +1.98 cents per gallon. Jan crude posted a 26-month high and Jan gasoline climbed to a fresh 7-month high in overnight trade as most commodity prices soared after President Obama agreed to extend tax cuts.


.  Crude oil and gasoline prices yesterday erased an early rally and settled mixed as the dollar strengthened: CLF11 +$0.19, RBF11 -1.04. Jan crude rallied to a 26-month high and Jan gasoline posted a 7-month high but shed its gains and settled lower.

                Bullish factors included (1) comments from Fed Chairman Bernanke who said a return to recession "doesn't seem likely" because sectors of the economy such as housing can't become more depressed, (2) a possible increase in heating fuel demand after the National Weather Service Climate Prediction Center said temperatures in the US Midwest and Northeast will be lower than normal from Dec 8-16, and (3) the action by Nigerian rebel forces to damage a crude pipeline in Nigeria which may reduce crude oil output from Africa's biggest producer.

                Bearish factors included (1) strength in the dollar which curtails investment demand for commodities, and (2) the action by Moody's Investors Service to cut Hungary's debt to the lowest investment grade and indicate it may cut the rating to junk, which indicates a possible worsening of the European debt crisis that may limit economic growth and energy demand.

[setravis]

Wednesday, December 8, 2010...

Today's Market Focus

•   March 10-year T-notes this morning are trading down -15.5 ticks and slid to a fresh 4-1/4 month low in overnight trade. T-note prices yesterday slumped and settled sharply lower after President Obama agreed to a 2-year extension of the Bush-era tax cuts: TYH11 -1-30, FVH11 -1-2.7, EDM11 -5.0. The yield on the 10-year T-note surged to a 5-1/4 month high of 3.17%.

                Bearish factors included (1) the action by President Obama to agree to a 2-year extension of tax cuts, which reduced the safe-haven demand for Treasuries as the stock market rallied and may potentially boost economic growth and widen the budget deficit, (2) carry-over weakness from a surge in the yield on the 10-year German bund to a 6-1/2 month high, (3) data from the US Labor Department that showed job openings in the US rose by 351,000 in Oct to a 2-year high of 3.36 million, (4) weak demand for the Treasury's $32 billion 3-year T-note auction that had a bid-to-cover ratio of 2.91, below the 12-auction average of 3.12, and (5) supply pressures ahead of the Treasury's auction of $21 billion in 10-year T-notes on Wed.



•   The dollar index this morning is trading higher with the dollar/yen +0.46 yen and the euro/dollar -0.23 cents. The dollar index yesterday traded lower early after President Obama said he would agree to extend tax cuts, but erased its losses and finished higher as the euro weakened: Dollar Index +0.286, USDJPY +0.833, EURUSD -0.00459. The yen rallied to a 3-week high against the dollar but erased its gains and settled lower.

                Bullish factors included (1) comments from Japanese finance minister Noda who said the yen's movements have become one-sided and he will "keep a close eye" on the market, which may signal possible intervention in the currency market by Japan if recent yen strength continues, and (2) a possible increase in the safe-haven demand for the dollar after the IMF warned that the European economic recovery could "easily be derailed" by the debt crisis and that European finance ministers should increase the size of its 750 billion euro ba ilout fund.

                Bearish factors for the dollar included (1) reduced safe-haven demand for the dollar after global stock markets rallied when President Obama agreed to extend he Bush-era tax cuts for 2 years, and (2) the action by European finance ministers to rule out immediate aid for Portugal and Spain or to increase the 750 billion-euro bailout fund.



•   January crude oil prices this morning are trading down -75 cents a barrel and January gasoline is -2.34 cents per gallon. Crude oil and gasoline prices yesterday rallied early after President Obama agreed to extend tax cuts but gave up their gains and closed lower as the dollar strengthened: CLF11 -$0.69, RBF11 -1.87. Jan crude rallied to a 26-month high but erased its gains and closed lower and Jan gasoline climbed to a 7-month high but shed its gains and finished lower.

                Bearish factors included (1) the rebound in the dollar which shook off early weakness and finished higher, (2) weakness in gasoline after Irving Oil and Valero Energy returned refinery units to service after scheduled maintenance, which will increase gasoline output, and (3) long liquidation in crude oil after prices jumped over $10 a barrel in the past 2-weeks (+13%) to a 26-month high.

                Bullish factors included (1) the action by President Obama to agree to extend the Bush-era tax cuts for 2 years, which may lift the economy and energy demand, (2) the prediction from the National Weather Service's Climate Prediction Center that temperatures from the US Midwest to the Northeast will be lower than normal from Dec 12 through Dec 20, and (3) the outlook for a decrease in US crude supplies when the DOE releases its weekly crude inventory data Wednesday. Expectations for Wednesday's weekly inventory report from the DOE are for crude oil supplies to fall -1.5 million bbl, gasoline stockpiles to increase +750,000 bbl, distillate inventories to drop -900,000 bbl and the refinery capacity rate to rise +1.0 to 83.6%.

[setravis]

Thursday, December 9, 2010...

Today's Market Focus

•   March 10-year T-notes this morning are trading unchanged. T-note prices yesterday extended Tuesday's sharp slide and fell to a 4-3/4 month low on speculation that the extension of the Bush-era tax cuts will bolster the economy: TYH11 -19, FVH11 -17, EDM11 -4.0. The yield on the 10-year T-note surged to a 6-month high of 3.32%.

                Bearish factors included (1) carry-over weakness from Tuesday's slump on speculation the extension of the Bush-era tax cuts will bolster economic growth and widen the budget deficit, (2) slack demand for the Treasury's $21 billion auction of 10-year T-notes that had a bid-to-cover ratio of 2.92, below the 12-auction average of 3.07, and (3) supply pressures ahead of the Treasury's auction of $13 billion in 30-year T-bonds on Thu.

                Bullish factors include (1) a possible increase in the safe-haven demand for Treasuries after the head of the IMF said the effects of the global financial turmoil "are far from over" and that Europe remai ns in a "troubling" situation, and (2) concern that the 57 bp spike in the 10-year T-note yield over the past week will further hamper any recovery in the beleaguered US housing market.



•   The dollar index this morning is trading higher with the dollar/yen -0.01 yen and the euro/dollar -0.44 cents. The dollar index yesterday moved higher on speculation the extension of US tax cuts will sustain the economic recovery: Dollar Index +0.140, USDJPY +0.541, EURUSD +0.00007.

                Bullish factors included (1) carry-over support from Tuesday's news of the extension of the Bush-era tax cuts, which may boost US economic growth, (2) the jump in the 10-year T-note yield to a 6-month high, which improves the dollar's interest rate differentials and may boost foreign demand for dollar-denominated assets, and (3) the unexpected decline in Oct German exports, which may signal a slowdown in the European economy and is euro negative.

                Bearish factors for the dollar included (1) the passing of an initial series of votes by Irish lawmakers for budget cuts in Ireland's 2011 budget, which is euro positive as it signals the possible passage of an austerity plan by Ireland to secure bailout funds, and (2) the unexpected increase in the Nov Bank of France business sentiment to a 2-3/4 year high.



•   January crude oil prices this morning are trading up +18 cents a barrel and January gasoline is +0.87 of a cent per gallon. Crude oil and gasoline prices yesterday fell after the dollar strengthened and gasoline supplies unexpectedly increased: CLF11 -$0.41, RBF11 -1.84.

                Bearish factors included (1) strength in the dollar, (2) the unexpected increase in weekly gasoline and distillate supplies (gasoline +3.81 million bbl versus expectations of a -300,000 bbl draw and distillates +2.15 million bbl versus expectations of -900,000 bbl), (3) the +6.1% increase in US ethanol production to a record 939,000 barrels a day in the week ended Dec 3, which may cut refinery demand for gasoline, and (4) a possible interest rate hike by China which could slow its energy demand after it said it will release its inflation data 2 days earlier than planned, which fuels speculation of an imminent interest rate hike.

                Bullish factors included (1) the larger-than-expected draw down of weekl y crude inventories (-3.82 million bbl versus expectations of -1.5 million bbl), (2) the action by the US Energy Department to bolster its crude oil price estimate for this year to $78.98 from a Nov estimate of $78.80 and to raise its 2011 crude price estimate to $86.08 a barrel from last month's forecast of $85.17 as it hiked its US oil consumption forecast for 2011 to 19.24 million bpd, up +80,000 bpd from last month's forecast, and (3) the prediction from Colorado State University of an above-average hurricane season for the Atlantic in 2011 with 17 named storms, above the average of 11 named storms which increase the chances of service disruptions and damage to Gulf Coast oil installations and refiners.

[setravis]

Friday, December 10, 2010...

Today's Market Focus

•   March 10-year T-notes this morning are trading up +5 ticks. T-note prices yesterday traded mixed the entire day as Fed purchases of Treasuries offset a larger than expected decline in weekly unemployment claims: TYH11 -1, FVH11 -8.5, EDM11 +3.5.

                Bullish factors included (1) the Fed's purchase of $8.309 billion in Treasuries as part of its QE 2 program, (2) increased safe-haven demand for Treasuries after Fitch Ratings cut Ireland's credit rating, and (3) strong demand for the Treasury's $13 billion auction of 30-year T-bonds that had a bid-to-cover ratio of 2.74, higher than the 12-auction average of 2.64.

                Bearish factors include (1) the larger-than-expected decrease in weekly initial unemployment claims (-17,000 to 421,000 versus expectations of -11,000 to 425,000), and (2) Fed data that said US household wealth rose by $1.2 trillion in Q3 and that US household debt in Q3 fell -1.7%, its 10th consecutive quarterly decline, which may lead to an increase in consume r confidence that helps boost personal spending.



•   The dollar index this morning is trading lower with the dollar/yen -0.25 yen and the euro/dollar +0.17 cents. The dollar index yesterday closed higher for the fourth consecutive session on increased safe-haven demand after Ireland's credit rating was downgraded: Dollar Index +0.072, USDJPY -0.290, EURUSD -0.00237.

                Bullish factors included (1) weakness in the euro after Fitch Ratings cut Ireland's credit rating 3 levels to BBB+ from A+, citing "the additional fiscal costs of restructuring and supporting the banking system," and (2) the ECB's monthly bulletin which said the central bank will keep its emergency liquidity measures "as long as necessary, and at least" until mid-April.

                Bearish factors for the dollar included (1) strength in the yen after Q3 Japan GDP was revised higher, and (2) the euro positive statement from Fitch Ratings that said the Euro-Zone's "underlying credit fundamentals" are stronger than markets show and that the ri sk of a break-up of the Euro-Zone "is not sufficiently great to be factored into its sovereign debt ratings."



•   January crude oil prices this morning are trading +55 cents a barrel and January gasoline is +0.47 of a cent per gallon. Crude oil and gasoline prices fluctuated on either side of unchanged and settled slightly higher as optimism the economy was improving offset the negative effects of a stronger dollar: CLF11 +$0.09, RBF11 +3.58.

                Bullish factors included (1) the larger-than-expected decline in weekly initial unemployment claims, which indicates improvement in the labor market, (2) the upward revision to Q3 Japan GDP along with the biggest increase in Australian payrolls in 10 months, which signals strength in the global economy that may boost energy demand, and (3) strength in gasoline after Hovensa LLC shut its 150,000 barrel-a-day fluid catalytic cracker at its St. Croix refinery for repairs, which may reduce gasoline supplies available to the US East Coast.

                Bearish factors included (1) a stronger dollar, and (2) concern that the European credit crisis may worsen after Fitch Ratings cut Ireland's credit rating 3 levels, citing "the recent intensification of the financial crisis."

[setravis]

Monday, December 13, 2010...

Today's Market Focus

•   March 10-year T-notes this morning are trading down -18 ticks and slid to a fresh 5-1/2 month low in overnight trade. T-note prices last Friday traded lower the entire day on strong economic data and a surging stock market: TYH11 -17.5, FVH11 -7.5, EDM11 -2.5.

                Bearish factors include (1) the narrower-than-expected Oct US trade balance (-$38.7 billion versus expectations of -$43.9 billion) which shrank to a 9-month low as exports jumped +3.2% to a 2-year high and is positive for Q4 GDP growth, (2) the larger-than-expected increase in Nov import prices which posted their biggest monthly gain in a year (+1.3% m/m and +3.7% y/y versus expectations of +0.8% m/m and +2.8% y/y), and (3) the larger-than-expected increase in the Dec US University of Michigan consumer confidence which rose to a 6-month high (+2.6 to 74.2 versus expectations of +0.8 to 72.5).

                Bullish factors included (1) increased safe-haven demand for Treasuries after the PBOC raised banks' reserve requirem ents for the third time in the last five weeks, which may slow Chinese growth and lead to global economic weakness, and (2) speculation that the FOMC on Tuesday will discuss a plan to extend its quantitative easing program.



•   The dollar index this morning is trading weaker with the dollar/yen +0.05 yen and the euro/dollar +0.56 cents. The dollar index last Friday finished slightly higher as the Oct US trade balance shrank more than expected and European leaders disagreed on how to stem the sovereign-debt crisis: Dollar Index +0.001, USDJPY +0.205, EURUSD -0.00106.

                Bullish factors included (1) weakness in the euro after France backed Germany in refusing to add to the European Union's 440 billion ($581 billion) rescue fund and rejected the idea of issuing joint euro-bonds, which shows division among European leaders on how to quell the European debt crisis, (2) the narrower than expected Oct US trade deficit which shrank to its lowest level in 9 months, and (3) the unexpected declines in Oct French industrial and manufacturing production, which is euro bearish.

                Bearish factors for the dollar included (1) reduced safe-haven demand for the dollar after the stock market rallied when the Dec US University of Michigan consumer confidence rose more than expected to a 6-month high, and (2) euro supportive comments from ECB President Trichet who said the economic recovery in the Euro-Zone is "on track" and that "every quarter we have revised upward the projections for growth this year in 2010."



•   January crude oil prices this morning are trading up +$1.26 a barrel and January gasoline is +3.82 cents per gallon. Crude oil and gasoline prices slipped last Friday as the dollar strengthened: CLF11 -$0.58, RBF11 -3.12.

                Bearish factors included (1) a rally in the dollar, which reduces investment demand in commodities, (2) the action by the PBOC to raise banks' reserve requirements for the third time in the last five weeks, which may slow China's economy and energy demand, and (3) the prediction from tanker-tracker Oil Movements that OPEC will boost its crude shipments by 2.6% to 23.76 million barrels a day in the four weeks to Dec 25.

                Bullish factors included (1) the +26% m/m increase in Nov China crude imports to 20.3 MMT as refiners ramped up crude processing rates to ease a diesel shortage, and (2) the action by the IEA to raise its 2011 global crude oil demand forecast for the third straight month to 88.8 million barrels a day, up +260,000 barrels from their pre vious forecast and that global oil demand in Q3 of this year grew 3.3 million barrels a day y/y.

[setravis]

Tuesday, December 14, 2010...

Today's Market Focus

•   March 10-year T-notes this morning are trading down -3 ticks. T-note prices yesterday slumped to a 5-month low early but then rallied after mid-morning after a federal judge ruled against the US health-care overhaul: TYH11 +14, FVH11 +10, EDM11 +3.5. The 10-year T-note yield rose to a 6-1/4 month high of 3.39% but fell back and closed at 3.28%.

                Bullish factors include (1) the action by a US federal judge to rule that the US health-care overhaul in unconstitutional, which eases concern that the government will struggle to contain record deficits, and (2) the action by the Fed to buy $7.79 billion of Treasuries as part of its QE 2 program.

                Bearish factors included (1) reduced safe-haven demand for Treasuries after global stock markets rallied when China refrained from raising interest rates, and (2) speculation that Congress will support economic growth by passing President Obama's agreement to extend tax cuts.



•   The dollar index this morning is trading weaker and posted a 3-week low in overnight trade with the dollar/yen -0.36 yen and the euro/dollar +0.78 cents. The dollar index yesterday fell to a 1-week low on reduced safe-haven demand after global stock markets rallied: Dollar Index -0.786, USDJPY -0.559, EURUSD +0.01631.

                Bearish factors included (1) the action by China to refrain from raising interest rates, which lifted global equity markets on increased demand for riskier assets, and (2) the statement from Moody's Investors Service that said the US tax-cut package up for a procedural vote in the Senate boosts the chances for a negative outlook on the US credit rating.

                Bullish factors for the dollar included (1) the early jump in Treasury yields which improved the dollar's interest rate differentials and may improve foreign demand for dollar assets, and (2) the quarterly report from Germany's Bundesbank that said 2011 German GDP growth may weaken to 2.0% from 3.6% this year as the German economy shows a "considerable slowdown" in Q1 of 2011, which is euro negative.



•   January crude oil prices this morning are trading +4 cents a barrel and January gasoline is -0.67 of a cent per gallon. Crude oil and gasoline prices moved higher yesterday as the dollar weakened and after China's refiners boosted crude processing to a record in November: CLF11 +$0.82, RBF11 +0.91.

                Bullish factors included (1) the weaker dollar, which boosts investment demand in commodities, (2) the action by China's refineries to process a record 36.65 MMT of crude oil in Nov, or 8.96 million barrels a day, a sign of strong demand, and (3) the statement from Goldman Sachs that global oil demand has exceeded supply by more than 900,000 barrels a day on a seasonally adjusted basis since May, along with their prediction that the world oil market will remain in deficit in the first half of next year with prices averaging $100 a barrel in 2011 an $110 a barrel in 2012.

                Bearish factors included (1) the prediction from Merrill Lynch that Saudi Arabia will lead OPEC to incre ase crude production "early next year" to avoid a surge in prices that could put the global economic recovery at risk, and (2) the quarterly report from Germany's Bundesbank that said 2011 German GDP growth may weaken to 2.0% from 3.6% this year as the German economy shows a "considerable slowdown" in Q1 of 2011, which may lead to reduced energy demand.

[setravis]

Wednesday, December 15, 2010...

Today's Market Focus

•   March 10-year T-notes this morning are trading up +8 ticks on increased safe-haven demand after Moody's Investors Service put Spain's credit rating on review for possible downgrade. T-note prices yesterday moved sharply lower on strong economic data after US retail sales and wholesale inflation increased more than expected: TYH11 -1-12/32, FVH11 -22.7, EDM11 -1.0. The 10-year T-note yield jumped to a 6-3/4 month high of 3.488%.

                Bearish factors include (1) the larger-than-expected increase in Nov retail sales and the upward revision to Oct (Nov +0.8% and +1.2% less autos versus expectations of +0.6% and +0.6% less autos and Oct retail sales revised up to +1.7% and +0.8% less autos from the previously reported +1.2% and +0.4% less autos), (2) the larger-than-expected increase in Nov PPI (+0.8% m/m and +3.5% y/y versus expectations of +0.6% m/m and +3.3% y/y), and (3) speculation that President Obama's agreement to extend tax cuts will win passage in Congress, which may support economic growth and widen the budget deficit.

                Bullish factors centered on the post-FOMC meeting statement that said (1) the Fed plans to keep interest rates low for an "extended period" and will maintain its plan to purchase $600 billion of Treasuries through June to "promote a stronger pace of economic recovery that is continuing at a rate that has been insufficient to bring down unemployment," and (2) deflation concerns after the Fed said the "measures of underlying inflation have continued to trend downward."



•   The dollar index this morning is trading higher with the dollar/yen +0.18 yen and the euro/dollar -0.20 cents. The dollar index yesterday rebounded from a 3-week low and closed little changed on speculation that a strengthening US economy will prompt the Fed not to increase its asset purchases: Dollar Index +0.083, USDJPY +0.268, EURUSD -0.00129.

                Bullish factors included (1) the rise in Treasury yields after Nov US retail sales increased more than forecast, which may prompt the Fed to reduce its purchases of Treasury debt, and (2) the prediction from Bank of Tokyo-Mitsubishi that the dollar will strengthen to $1.27 per euro in Q1 of 2011 as the ongoing European sovereign-debt crisis will fuel an increase in the safe-haven demand for the dollar because "the dollar is the only viable liquid reserve-currency alternative to the euro."

                Bearish factors for the dollar included (1) reduced safe-haven demand for the dollar as the stock market rallied, (2) the stronge r than expected Dec German ZEW economic sentiment which is euro positive, and (3) the Fed's pledge to keep interest rates low for an "extended period" along with keeping their plan to purchase $600 billion of Treasuries through June to "promote a stronger pace of economic recovery."



•   January crude oil prices this morning are trading down -76 cents a barrel and January gasoline is -1.14 cents per gallon. Crude oil and gasoline prices yesterday settled lower as the dollar rebounded from a 3-week low and on expectations for an increase in weekly gasoline inventories: CLF11 -$0.33, RBF11 -2.20.

                Bearish factors included (1) the rebound in the dollar index which recovered from a 3-week low to settle little changed, which reduces investment demand in commodities, and (2) weakness in gasoline prices on the outlook for an increase in weekly gasoline supplies when the DOE reports weekly gasoline inventories on Wed.

                Bullish factors included (1) a possible increase in heating fuel demand after the National Weather Service's Climate Prediction Center predicted that temperatures in the eastern half of the US will be below normal from Dec 19 to Dec 27, (2) the prediction from Goldman Sachs that a drop in OPEC spare production capacity will signal a "second stage" in the oil market's recovery that will lift crude prices above $100 a barrel by the second half of 2011, and (3) the prediction from Banque Saudi Fransi that "in order for Saudi Arabia to push other OPEC members to increase oil production, prices have to remain at or above $100 a barrel for a long period and not only for some weeks or a month." Expectations for Wednesday's DOE weekly inventory report are for crude oil stockpiles to drop -2.5 million bbl, gasoline inventories to increase +2.0 million bbl, distillate supplies to remain unchanged, and the refinery capacity rate to remain unchanged at 87.5%.

[setravis]

Thursday, December 16, 2010...

Today's Market Focus

•   March 10-year T-notes this morning are trading up +10.5 ticks. T-note prices yesterday erased an early rally after mid-morning and settled lower after strong US economic data offset increased flight-to-safety demand from the ongoing European debt crisis: TYH11 -12, FVH11 -7.5, EDM11 -6.0. The 10-year T-note yield climbed to a 7-month high of 3.556%.

                Bearish factors include (1) the larger-than-expected increase in the Dec Empire manufacturing index (+21.7 to 10.6 versus expectations of +16.1 to 5.0), (2) stronger-than-expected Nov industrial production (+0.4% versus expectations of +0.3%), and (3) the larger-than-expected increase in Nov capacity utilization, which climbed to its highest level in 25 months (+0.3 to 75.2 versus expectations of +0.2 to 75.0%).

                Bullish factors included (1) increased safe-haven demand for Treasuries after Moody's Investors Service put Spain's credit rating on review for possible downgrade, and (2) increased foreign demand for Treasuri es after China, the biggest holder of US Treasuries, increased its holdings of US debt in Oct by $23.3 billion to $906.8 billion and Japan, the second-biggest holder of US government debt, increased its holdings in Oct by $12.8 billion to $877.4 billion.



•   The dollar index this morning is trading lower with the dollar/yen -0.19 yen and the euro/dollar +0.41 cents. The dollar index yesterday closed higher on increased safe-haven demand from the European debt crisis along with stronger-than-expected US economic data: Dollar Index +0.894, USDJPY +0.580, EURUSD -0.01641.

                Bullish factors included (1) increased safe-haven demand for the dollar after Moody's Investors Service put Spain's credit rating on review for possible downgrade, (2) stronger-than-expected US economic data after the Dec Empire manufacturing index expanded more than expected while Nov industrial production rose more than forecast and Nov capacity utilization climbed to a 25-month high, and (3) the jump in the yield on the 10-year T-note to a 7-month high of 3.556%, which improves the dollar's interest rate differentials and may boost foreign demand for dollar assets.

                Bearish factors for the dollar included (1) a decrease in foreign demand for US dollar ass ets after the Oct TIC flows slowed from a month earlier, and (2) the prediction from Citigroup that the dollar may drop 11% against the euro next year as investors shun US assets and drive Treasury prices lower.



•   January crude oil prices this morning are trading down -41 cents a barrel and January gasoline is -0.23 of a cent per gallon. Crude oil and gasoline prices yesterday recovered from early weakness and settled higher after weekly crude inventories dropped by the most in 8 years: CLF11 +$0.34, RBF11 +1.28. Jan crude closed higher after posting a 1-week low and Jan gasoline finished higher after rebounding from a 2-week low.

               Bullish factors included (1) stronger-than-expected US economic data after the Dec Empire manufacturing index expanded more than expected while Nov industrial production rose more than forecast and Nov capacity utilization climbed to a 25-month high, (2) the plunge in weekly crude oil inventories by the most in 8 years (-9.85 million bbl versus expectations of -2.5 million bbl), (3) the smaller-than-expected increase in weekly gasoline inventories (+809,000 bbl versus expectations of +2.0 million bbl), and (4) an increase in US gasoline demand after t he Energy Department reported that US gasoline demand as measured by what refiners and blenders provide to wholesalers in the week ended Dec 10 rose 1.9% to a 7-week high of 9.35 million barrels a day.

                Bearish factors included (1) the stronger dollar, and (2) the unexpected increase in weekly distillate inventories, which are now +16% above their 5-year average for the period (+1.09 million bbl versus expectations of no change).

[setravis]

Friday, December 17, 2010...

Today's Market Focus

•   March 10-year T-notes this morning are trading up +15 ticks. T-note prices yesterday closed higher as increased safe-haven demand for Treasuries from the ongoing European sovereign-debt crisis overshadowed stronger-than-expected US economic data: TYH11 +10, FVH11 +4.5, EDM11 +5.0. The 10-year T-note yield climbed to a 7-month high of 3.560% before turning lower.

                Bullish factors included (1) increased safe-haven demand for Treasuries after Moody's Investors Service placed Greece's credit ratings on review for possible downgrade due to concerns about Greece's ability to cut debt to "sustainable levels" and a revenue shortfall this year, and (2) the unexpected decline in Nov US building permits to a 19-month low (-4.0% to 530,000 versus expectations of +1.5% to 560,000).

                Bearish factors include (1) the unexpected decline in weekly initial US unemployment claims (-3,000 to 420,000 versus expectations of +4,000 to 425,000), (2) the larger-than-expected incre ase in Nov US housing starts (+3.9% to 555,000 versus expectations of +6.0% to 550,000), and (3) the unexpected increase in the Dec Philadelphia Fed manufacturing index which expanded at its fastest pace in 5-1/2 years (+1.8 to 24.3 versus expectations of -7.5 to 15.0).



•   The dollar index this morning is trading little changed with the dollar/yen +0.13 yen and the euro/dollar +0.09 cents. The dollar index yesterday finished slightly lower as short-covering in the euro ahead of the 2-day meeting of EU leaders offset stronger-than-expected US economic data that boosted Treasury yields: Dollar Index -0.080, USDJPY -0.326, EURUSD +0.00299.

                Bearish factors for the dollar included (1) concern that the US housing crisis may derail the economic recovery after Nov US building permits unexpectedly declined to 19-month low, (2) euro short-covering ahead of the 2-day summit in Brussels by EU leaders to discuss the debt crisis, and (3) the larger-than-expected increase in the Dec German PMI manufacturing index to a 5-month high, which is euro positive.

                Bullish factors included (1) stronger-than-expected US economic data on weekly initial unemployment claims and Dec Philadelphia Fed manufacturing, which sent the yield on the 10-year T-note to a 7-mo nth high of 3.56% and improves the dollar's interest rate differentials and may increase demand for dollar assets, (2) the action from Moody's Investor's Service to place Greece's Ba1 local and foreign currency government bond ratings on review for possible downgrade, which is euro negative and may increase the safe-haven demand for the dollar.



•   January crude oil prices this morning are trading -18 cents a barrel and January gasoline is +0.37 of a cent per gallon. Crude oil and gasoline prices yesterday traded on the defensive most of the day due to strength in the dollar: CLF11 -$0.92, RBF11 -0.49.

                Bearish factors included (1) stronger-than-expected US economic data that boosted the dollar, and (2) the weaker than expected Dec Euro-Zone PMI composite which signals a decrease in energy consumption.

                Bullish factors included (1) the unexpected decline in US weekly unemployment claims along with the unexpected increase in the Dec Philadelphia Fed manufacturing index to its best level in 5-1/2 years, which signals an economic recovery that has legs and may boost fuel demand, and (2) the action by Barclays Plc to hike its crude oil forecast for next year to $91 a barrel from $85, saying that OPEC won't consider increasing oil production until crude prices reach $100 a barrel, rather than raising crude output befor e prices rise that far.

[setravis]

Monday, December 20, 2010...

Today's Market Focus

•   March 10-year T-notes this morning are trading up +2 ticks. T-note prices last Friday traded higher throughout the day and finished sharply higher on increased safe-haven demand after Moody's cut Ireland's credit rating: TYH11 +1-1/32, FVH11 +16.5, EDM11 +4.0.


                Bullish factors included (1) increased safe-haven demand for Treasuries on concern the European sovereign-debt crisis may worsen after Moody's Investors Service downgraded Ireland's credit rating five notches to Baa1 from Aa2, with a "negative" outlook, and (2) the action by the Fed to purchase $2.03 billion of Treasuries as part of its QE2 asset-purchase program.

                Bearish factors include (1) reduced safe-haven demand for Treasuries after Nov US leading indicators rose +1.1% m/m, the biggest increase in 8 months and a sign that the economic recovery will continue into next year, and (2) the action by Congress to pass the $858 billion bill that extends tax cuts enacted during the Bush administration for another 2 years, which may fuel further growth in the US economy and widen the budget deficit.



•   The dollar index this morning is trading higher with the dollar/yen -0.20 yen and the euro/dollar -0.21 cents. The dollar index last Friday rallied to a 2-week high and closed higher on increased safe-haven demand on concern the European sovereign-debt crisis will worsen: Dollar Index +0.192, USDJPY -0.035, EURUSD -0.00584.

                Bullish factors for the dollar included (1) increased safe-haven demand for the dollar after Moody's Investors Service downgraded Ireland's credit rating five notches to Baa1 from Aa2 with a negative outlook, (2) weakness in the British pound which plunged to a 3-month low against the dollar after Nov UK nationwide consumer confidence unexpectedly fell to a 20-month low, and (3) disappointment that the 2-day EU summit on the debt crisis failed to yield any immediate concrete steps to stem the crisis, which undercut confidence in the euro and fueled its decline to a 2-week low against the dollar.

                Bearish factors included (1) the unexpected increase in the Dec German IFO business climate which rose to its highest level since records for a reunified Germany began in 1991 and is euro bullish, and (2) the agreement by European Union leaders to amend the bloc's treaties to create a permanent debt-crisis mechanism in 2013, which temporarily boosted the euro.



•   January crude oil prices this morning are trading up +67 cents a barrel and January gasoline is +2.50 cents per gallon. Crude oil and gasoline prices last Friday closed slightly higher as an increase in US leading economic indicators offset a rally in the dollar: CLF11 +$0.32, RBF11 +1.35.

                Bullish factors included (1) the +1.1% m/m increase in Nov US leading indicators, the biggest increase in 8 months and a sign that fuel demand may improve as the economic recovery continues into next year, (2) the unexpected increase in the Dec German IFO business confidence to a record high, which improves the outlook for the European economy and energy demand, and (3) the report from the API that said Nov US fuel consumption jumped +6.5% y/y to 20 million barrels a day and that total US fuel consumption from Jan-Nov is up +2.4% y/y to 19.2 million barrels a day.

                Bearish factors included (1) the surge in the dollar index to a 2-week high, which reduces investment demand for commodi ties, and (2) the prediction from tanker-tracker Oil Movements that OPEC crude oil shipments will increase +0.3% to 23.46 million barrels a day in the four weeks to Jan 1.