Today's Market Focus

[setravis]

Friday, April 29, 2011...

Today's Market Focus

•   June 10-year T-notes this morning are down -1 tick. T-note prices yesterday rose to a 1-1/4 month high on weaker than expected US economic data but pared some of their gains late in the session after the Treasury's 7-year T-note auction was met with weak demand: TYM11 +17, FVM11 +12.5, EDU11 +1.5. The 10-year T-note yield fell to a 1-month low of 3.295%.

                Bullish factors included (1) the weaker-than-expected Q1 US GDP (+1.8% annualized versus expectations of +2.0% annualized), (2) the unexpected jump in weekly initial US unemployment claims to a 3-month high (+25,000 to 429,000 versus expectations of -8,000 to 395,000), and (3) the action by the Fed to purchase $6.678 billion of Treasuries as part of its QE2 asset-purchase program.

                Bearish factors included (1) the larger-than-expected increase in the Q1 core PCE deflator which rose at the fastest pace in 15 months (+1.5% q/q annualized versus expectations of +1.4% q/q annualized), (2) the larger-than-expected incr ease in Mar US pending home sales (+5.1% m/m versus expectations of +1.5% m/m), (3) weak demand for the Treasury's $29 billion 7-year T-note auction that produced a bid-to-cover ratio of 2.63, weaker than the 12-auction average of 2.88 and the lowest in 5 months, and (4) reduced safe-haven demand for Treasuries after the S&P 500 rose to a 2-3/4 year high.



•   The dollar index this morning is lower with the dollar/yen -0.19 yen and the euro/dollar +0.39 cents. The dollar index yesterday fell to a 2-3/4 year low and closed lower after weak US economic data undercut the dollar while the fall in Apr German unemployment to a 19-year low boosted the euro: Dollar Index -0.398, USDJPY -0.619, EURUSD +0.00345.

                Bearish factors included (1) weaker-than-expected US economic data that included slower-than-expected growth in Q1 US GDP and weekly initial jobless claims that rose to a 3-month high, and (2) strength in the euro which climbed to a 16-1/2 month high against the dollar after Apr German unemployment fell -37,000 to 2.97 million, a 19-year low along with supportive interest rate differentials for the euro as the 3-month Euribor rate rose to a 2-year high of 1.375%.

                Bullish factors included (1) the action by the BOJ to cut its growth estimate for the year ending Mar 2012 to 0.6% from a Jan prediction of 1.6%, which is yen negati ve, and (2) the unexpected decline in Mar French consumer spending, which is euro bearish.



•   June crude oil prices this morning are trading down -23 cents a barrel and June gasoline is -1.21 cents per gallon. Crude oil and gasoline prices yesterday fluctuated between gains and losses and finished higher as the plunge in the dollar offset weaker-than-expected economic data: CLM11 +$0.10, RBM11 +1.14. Jun crude posted a 2-1/2 year high, while Jun gasoline posted a contract high and nearest-futures May gasoline climbed to a 2-3/4 year high.

                Bullish factors included (1) the slide in the dollar index to a 2-3/4 year low, which boosts investment demand in commodities, (2) the decline in Apr German unemployment to a 19-year low, which shows economic strength that my lead to increased fuel demand, and (3) the rally in the S&P 500 to a 2-3/4 year high, which bolsters confidence in the economic outlook and energy demand.

                Bearish factors included (1) the unexpected increase in weekly US jobless claims to a 3-month high, which shows weakness in the US labor market t hat may curtail fuel demand, (2) the weaker than expected Q1 US GDP, which shows slower-than-expected energy consumption, and (3) the action by the BOJ to cut its GDP growth forecast for Japan this year, which signals reduced energy consumption and demand.

[setravis]

Monday, May 2, 2011...

Today's Market Focus

•   June 10-year T-notes this morning are down -1.5 ticks. T-note prices last Friday rallied after mid-morning and closed higher as weaker than expected consumer confidence and manufacturing data offset stock market strength and stronger-than-expected personal spending: TYM11 +6, FVM11 +3.7, EDU11 -0.5. The 10-year T-note yield fell to a 1-1/4 month low of 3.280%.

                Bullish factors included (1) the weaker-than-expected Apr Chicago purchasing managers index (-3.0 to 67.6 versus expectations of -2.4 to 68.2), (2) the weaker-than-expected Apr US University of Michigan consumer confidence (+0.2 to 69.8 versus expectations of +0.4 to 70.0), and (3) the smaller-than-expected increase in the Mar PCE deflator (+1.8% y/y versus expectations of +1.9% y/y.

                Bearish factors included (1) the larger-than-expected increase in Mar personal spending along with the upward revision to Feb (Mar +0.6% versus expectations of +0.5% and Feb revised up to +0.9% from the originally reported +0.7 %), (2) the larger-than-expected increase in the Q1 employment cost index (+0.6% versus expectations of +0.5%), and (3) reduced safe-haven demand for Treasuries after the S&P 500 rose to a 2-3/4 year high.



•   The dollar index this morning is weaker and fell to a fresh 2-3/4 year low in overnight trade with the dollar/yen +0.19 yen and the euro/dollar +0.36 cents. The dollar index last Friday tumbled to a 2-3/4 year low and settled lower as weaker-than-expected US manufacturing data undercut the dollar while an increase in Euro-Zone inflation boosted the euro to a 16-1/2 month high: Dollar Index -0.188, USDJPY -0.335, EURUSD -0.00142.

                Bearish factors included (1) the weaker-than-expected Apr Chicago purchasing mangers index, which indicates a slowdown in US manufacturing and is dollar negative, (2) early strength in the euro which rallied to a 16-1/2 month high against the dollar after the Apr Euro-Zone CPI estimate rose more than expected to a 2-1/2 year high, which bolsters speculation for additional ECB rate hikes, and (3) reduced safe-haven demand for the dollar after the S&P 500 climbed to a 2-3/4 year high.

                Bullish factors included (1) the unexpected decline in Ma r German retail sales, which is euro negative, and (2) the stronger-than-expected Mar US personal spending, which indicates strength in the US economy and is dollar supportive.



•   June crude oil prices this morning are trading down sharply by -$1.91 a barrel and June gasoline is -5.50 cents per gallon. Crude oil plunged in overnight trade on speculation that the death of Osama Bin Laden may ease the risk of Middle East supply disruptions. Crude oil and gasoline prices last Friday settled higher due to a weak dollar and better-than-expected US consumer spending: CLM11 +$1.07, RBM11 +2.88. Nearest-futures May gasoline posted a 2-3/4 year high.

                Bullish factors included (1) the continued slide in the dollar index to a 2-3/4 year low, which boosts investment demand in commodities, and (2) the larger-than-expected increase in Mar US personal spending, which bodes well for the sustainability of the economic expansion and energy demand.

                Bearish factors included (1) the unexpected decline in Mar German retail sales along with the slower than expected increase in South Korean Mar industrial production, which indicates a slowdown in Asian and European f uel demand, and (2) the weaker-than-expected Apr Chicago purchasing managers index, which signals reduced energy demand.

[setravis]

Tuesday, May 3, 2011...

Today's Market Focus

•   June 10-year T-notes this morning are up +4.5 ticks. T-note prices yesterday shed early losses and closed higher on concern global growth may slow after China's manufacturing activity unexpectedly slowed in April along with increased safe-haven demand for Treasuries after the stock market erased an early rally: TYM11 +3, FVM11 +0.7, EDU11 +0.5. The 10-year T-note yield fell to a 1-1/2 month low of 3.261%.

                Bullish factors included (1) the unexpected decline in the Apr China PMI manufacturing index, which signals a slowdown in the Chinese economy that may also slow the global economy, (2) Fed data that shows US banks bought $65 billion of Treasuries in the past 7 weeks, the most in 9 months, due to slower-than-expected economic growth and stagnant loan demand, and (3) the Fed's action to purchase $7.24 billion of Treasuries as part of its QE2 asset-purchase program.

                Bearish factors included (1) the smaller-than-expected decrease in the Apr ISM manufacturing index ( -0.8 to 60.4 versus expectations of -1.6 to 59.6), (2) inflation concerns after the unexpected increase in the prices paid sub-index of the Apr ISM manufacturing index which climbed to its highest level in 2-3/4 years (+0.5 to 85.5 versus expectations of -2.0 to 83.0), and (3) the larger-than-expected increase in Mar construction spending which rose at its fastest pace in 11 months (+1.4% versus expectations of +0.3%).



•   The dollar index this morning is higher with the dollar/yen -0.38 yen and the euro/dollar -0.39 cents. The dollar index yesterday relinquished an early rally and closed little changed as the dollar's interest rate differentials remain weak on speculation the Fed will keep interest rates at record lows while other central banks raise their rates: Dollar Index -0.188, USDJPY -0.335, EURUSD -0.00142. The dollar index fell to a 2-3/4 year low but erased its losses and closed little changed.

                Bearish factors included (1) strength in the euro which rallied to a 16-3/4 month high against the dollar on speculation the ECB will continue to tighten monetary policy after French and German PMI manufacturing indexes were unexpectedly revised upward, (2) comments from Jean-Claude Juncker, head of the Euro-Zone finance ministers, who said the euro's current strength is "not worrying" and won't hinder growth in the region, and (3) reduced safe-haven demand for the dollar aft er the S&P 500 climbed to a 2-3/4 year high.

                Bullish factors included (1) early strength in the dollar after news that Osama bin Laden was killed, which fueled speculation that the terror risk will get smaller for the US, and (2) the stronger than expected Apr ISM manufacturing index, which indicates economic strength and is dollar supportive.



•   June crude oil prices this morning are trading down -$1.09 a barrel and June gasoline is -0.52 of a cent per gallon. Crude oil and gasoline prices closed lower but well off of their worst levels as an unexpected decline in Apr Chinese manufacturing activity offset the plunge in the dollar index to a 2-3/4 year low: CLM11 -$0.41, RBM11 -5.05. Jun crude posted a 2-1/2 year high and Jun gasoline rallied to a 2-3/4 year high, but they erased all of their gains and finished lower.

                Bearish factors included (1) the unexpected decline in the Apr China PMI manufacturing index, which indicates a slowdown in the Chinese economy that is negative for energy demand, and (2) the early sell-off in energy markets on speculation that the death of Osama bin Laden may lead to stability in the Middle East.

                Bullish factors included (1) incessant dollar weakness after the dollar index sank to a 2-3/4 year low, which boosts investment demand in commodities, (2) the smaller-than-expected dec rease in the Apr ISM manufacturing index, which is positive for energy demand and consumption, and (3) fears of reprisals by al-Qaeda that may disrupt crude supplies after the US killed Osama Bin Laden.

[setravis]

Wednesday, May 4, 2011...

Today's Market Focus

•   June 10-year T-notes this morning are down -2.5 ticks. T-note prices yesterday finished higher after the stock market fell and after the Fed bought Treasuries for its asset-purchase program: TYM11 +6.5, FVM11 +3.2, EDU11 +0.5. The 10-year T-note yield fell to a 1-1/2 month low of 3.246%.

                Bullish factors included (1) increased safe-haven demand for Treasuries as the stock market weakened, and (2) the Fed's action to purchase $7.678 billion of Treasuries as part of its QE2 asset-purchase program.

                Bearish factors included (1) the larger-than-expected increase in Mar factory orders along with the unexpected upward revision to Feb (Mar +3.0% versus expectations of +2.0% and Feb revised up to +0.7% from the originally reported -0.1%), and (2) hawkish comments from Kansas City Fed President Hoenig who said there is a "pretty high" likelihood that the US economy will keep expanding after growth in Q1 was weaker than expected and that the Fed should begin withdr awing its monetary stimulus as part of efforts to "calm" concerns about inflation in the US.



•   The dollar index this morning is lower with the dollar/yen +0.22 yen and the euro/dollar +0.32 cents. The dollar index yesterday settled slightly higher after Mar US factory orders rose more than expected: Dollar Index +0.189, USDJPY -0.296, EURUSD -0.00044.

                Bullish factors included (1) the larger-than-expected increase in Mar US factory orders and the unexpected upward revision to Feb factory orders, which signals economic strength and is dollar supportive, and (2) comments from Kansas City Fed President Hoenig who said there is a "pretty high" likelihood that the US economy will keep expanding after growth in Q1 was weaker than expected and that the Fed should begin withdrawing its monetary stimulus as part of efforts to "calm" concerns about inflation in the US.

                Bearish factors included (1) strength in the euro after Mar Euro-Zone producer prices accelerated more than expected to their fastest pace in 2-1/2 years, which bolsters the outlook for further ECB interest rate hikes, and (2) the prediction from Credit Suisse Group AG that the dollar will weaken to $1.50 per euro in the next 12 months on interest rate differentials and low volatility.



•   June crude oil prices this morning are trading down -36 cents a barrel and June gasoline is -1.20 cents per gallon. Crude oil and gasoline prices yesterday closed lower on long liquidation due to equity market weakness and expectations of increased supply when the weekly DOE inventory figures are released on Wed: CLM11 -$2.47, RBM11 -1.85.

                Bearish factors included (1) long liquidation prompted by weakness in the stock market which reduces confidence in the economic outlook and energy demand, (2) the slump in UK manufacturing activity in Apr to its lowest level in 7 months, which indicates reduced energy demand and consumption, and (3) the outlook for increased crude supplies when the DOE releases its weekly inventory numbers on Wed.

                Bullish factors included (1) hedge fund buying of crude after the NYMEX reported that open interest in crude oil futures traded on the New York Mercantile Exchange rose to a record 1.63 million contracts on Monday, and (2) the stronger tha n expected Mar US factory orders and the upward revision to Feb factory orders, which signals strength in fuel consumption. Expectations for Wednesday's weekly inventories from the DOE are for crude supplies to rise +1.9 million bbl, gasoline stockpiles to remain unchanged, distillate inventories to gain +500,000 bbl and the refinery utilization rate to rise +0.5 to 83.2%.

[setravis]

Thursday, May 5, 2011...

Today's Market Focus

•   June 10-year T-notes this morning are up +4 ticks. T-note prices yesterday rallied to a 1-1/2 month high on weaker-than-expected economic data along with dovish Fed speak: TYM11 +6.5, FVM11 +1.5, EDU11 +1.0. The 10-year T-note yield fell to a 1-1/2 month low of 3.206%.

                Bullish factors included (1) the smaller-than-expected increase in the Apr ADP employment change (+179,000 versus expectations of +195,000), (2) the unexpected decline in the Apr ISM non-manufacturing index which matched its lowest level in 14 months (-4.5 to 52.8 versus expectations of +0.2 to 57.5), and (3) dovish comments from Boston Fed President Rosengren who said "with significant slack in labor markets, stable inflation expectations, and core inflation well below our longer run target, there is currently no reason to slow the economy down with tighter monetary policy."

                Bearish factors included (1) supply pressures ahead of the Treasury's auctions of $72 billion in T-notes and T-bon ds in next week's quarterly refunding, and (2) the prediction from Principal Global Investors that "the economy is on a sustainable recovery" and the yield on the 10-year T-note will climb to 3.75% by year-end.



•   The dollar index this morning is weaker with the dollar/yen -0.80 yen and the euro/dollar +0.04 cents. The dollar index yesterday sank to a 2-3/4 year low on weak US economic data along with strength in the euro which rallied to a 17-month high against the dollar on speculation ECB President Trichet will signal further rate increases when he speaks on Thursday: Dollar Index -0.109, USDJPY -0.311, EURUSD +0.00017.

                Bearish factors included (1) weaker-than-expected US economic data on Apr ISM non-manufacturing and Apr ADP employment, which may prompt the Fed to keep interest rates at record lows and further weaken the dollar's interest rate differentials, (2) speculation that ECB President Trichet will signal further interest rate increases when he speaks at Thursday's monthly press conference, and (3) dollar negative comments from Boston Fed President Rosengren who said he sees "no reason" to raise interest rates amid higher oil prices.

                Bullish factors include d (1) increased safe-haven demand for the dollar after the equity market tumbled, and (2) the weaker-than-expected Mar Euro-Zone retail sales, which is euro negative.



•   June crude oil prices this morning are trading down -$2.40 a barrel at a 2-week low and June gasoline is -6.25 cents per gallon. Crude oil and gasoline prices yesterday retreated after US crude inventories climbed to a 6-month high and weaker-than-expected economic data raised demand concerns: CLM11 -$1.81, RBM11 -0.69. Jun crude fell to a 2-week low and Jun gasoline posted a 1-week low.

                Bearish factors included (1) weaker-than- expected US economic data on Apr ISM non-manufacturing and Apr ADP employment, which raises concern a slowdown in economic growth will also curb energy demand, (2) the larger-than-expected increase in weekly crude inventories which climbed to a 6-month high (+3.42 million bbl to 366.5 million bbl versus expectations of +1.9 million bbl), and (3) weakened fuel demand after US gasoline demand in the week ended Apr 29 fell -2.2% w/w to 8.94 million barrels a day.

                Bullish factors included (1) the fall in the dollar index to a 2-3/4 year low, whic h boosts investment demand in commodities, (2) the larger-than-expected decline in weekly gasoline inventories which fell to a 1-3/4 year low (-1.05 million bbl to 204.5 million bbl versus expectations of -500,000 bbl), and (3) the unexpected decline in weekly distillate inventories (-1.40 million bbl versus expectations of a +500,000 bbl increase).

[setravis]

Friday, May 6, 2011...

Today's Market Focus

•   June 10-year T-notes this morning are up +3 ticks. T-note prices yesterday moved higher as inflation concerns receded after weekly jobless claims unexpectedly increased and commodity prices tumbled: TYM11 +13.5, FVM11 +7.5, EDU11 +0.5. The 10-year T-note yield fell to a 1-1/2 month low of 3.151%.

                Bullish factors included (1) the unexpected increase in weekly initial unemployment claims to an 8-1/2 month high (+43,000 to 474,000 versus expectations of -19,000 to 410,000), (2) reduced inflation concerns after the larger-than-expected increase in Q1 nonfarm productivity and the upward revision to Q4 (Q1 +1.6% versus expectations of +1.1% and Q4 revised up to +2.9% from the previously reported +2.6%), (3) comments from Atlanta Fed President Lockhart who said "there is virtually no net job creation resulting from new business formation in recent quarters," and (4) comments from San Francisco Fed President Williams who said a period of high inflation is " very unlikely" because rising commodity prices spurred by global demand aren't likely to keep climbing.

                Bearish factors was the comments from Minneapolis Fed President Kocherlakota who said it would be "desirable" to raise interest rates this year and that he would support a 50 bp increase in the Fed funds rate.



•   The dollar index this morning is little changed with the dollar/yen +0.17 yen and the euro/dollar -0.18 cents. The dollar index yesterday rebounded to a 1-week high after the euro tumbled when ECB President Trichet signaled the ECB may wait until after June to raise interest rates again: Dollar Index +1.163, USDJPY -0.443, EURUSD -0.03038.

                Bullish factors included (1) comments from ECB President Trichet, which were less hawkish than the markets were expecting, when he refrained from using the phrase "strong vigilance" against inflation, which signals the ECB may wait until after its June meeting to raise interest rates further, (2) the unexpected drop in Mar German factory orders, which is euro negative, and (3) the drop in the British pound to a 2-week low against the dollar after Apr UK PMI services fell more than expected to a 4-month low.

                Bearish factors included (1) the unexpected increase in weekly US jobless claims to an 8-1/2 month high, which signals economic weakness and may prompt the Fed to maintain its overly easy monetary policy, and (2) strength in the yen which rallied to a 1-1/2 month high against the dollar after Japanese Finance Minister Noda said the recent rally in the yen is due to dollar weakness, which signals the BOJ may refrain from further currency intervention to weaken the yen.



•   June crude oil prices this morning are trading down -$2.00 a barrel at a 2-1/4 month low and June gasoline is -2.38 cents per gallon. Crude oil and gasoline prices yesterday sold-off sharply as the dollar rebounded and an unexpected increase in weekly jobless claims bolstered demand concerns: CLM11 -$9.44, RBM11 -11.71. Jun crude fell to a 1-1/2 month low and Jun gasoline dropped to a 1-month low.

                Bearish factors included (1) the rally in the dollar index to 1-week high, which prompted long liquidation of most commodities, (2) the unexpected increase in weekly US jobless claims to an 8-1/2 month high, which fuels concern that economic growth and fuel demand will decline, and (3) the unexpected drop in Mar German factory orders, which indicates weakened energy consumption.

[setravis]

Monday, May 9, 2011...

Today's Market Focus

•   June 10-year T-notes this morning are down -3.5 ticks. T-note prices last Friday shook off early weakness from the strong Apr nonfarm payrolls report and moved higher on increased safe-haven demand due to speculation that Greece may leave the European Union: TYM11 +7, FVM11 +5.2, EDU11 -1.0. The 10-year T-note yield fell to a 5-month low of 3.129%.

                Bullish factors included (1) the unexpected increase in the Apr unemployment rate (+0.2 to 9.0% versus expectations of unchanged at 8.8%), (2) increased safe-haven demand for Treasuries after Der Spiegel magazine reported that Greece is considering reintroducing its own currency and may leave the European monetary union, and (3) comments from New York Fed President Dudley who said the US recovery is still a "considerable way" from the Fed's goals, which suggest he favors keeping the Fed's overly easy monetary policy in place.

                Bearish factors included (1) the stronger-than-expected Apr nonfarm payrolls (+244,0 00 versus expectations of +185,000), (2) the larger-than-expected increase in Apr manufacturing payrolls (+29,000 versus expectations of +20,000), and (3) early strength in stocks which sapped the safe-haven demand for Treasuries.



•   The dollar index this morning is weaker with the dollar/yen +0.12 yen and the euro/dollar +0.86 cents. The dollar index last Friday rallied to a 2-1/2 week high on strong Apr US nonfarm payrolls and on a report that Greece was considering leaving the Euro-Zone: Dollar Index +0.647, USDJPY +0.559, EURUSD -0.02249.

                Bullish factors included (1) the stronger-than-expected Apr US nonfarm payrolls which signals economic strength and is dollar supportive, and (2) weakness in the euro which fell to 2-week low against the dollar after Der Spiegel magazine reported that Greece is considering reintroducing its own currency and may stop using the euro.

                Bearish factors included (1) comments from New York Fed President Dudley who said the US recovery is still a "considerable way" from the Fed's goals, which suggest he favors keeping the Fed's overly easy monetary policy in place, and (2) the stronger-than-expected Mar German industrial production, which is euro supportive .



•   June crude oil prices this morning are trading up $3.12 a barrel and June gasoline is +9.66 cents per gallon. Crude oil and gasoline prices last Friday fluctuated on both sides of unchanged and finally settled lower as a rally in the dollar offset the strong Apr nonfarm payrolls report: CLM11 -$2.62, RBM11 -0.53. Jun crude fell to a 2-1/4 month low and Jun gasoline dropped to a 1-1/4 month low.

                Bearish factors included (1) the rally in the dollar index to 2-1/2 week high, which erodes investment demand in commodities, (2) technical selling with the drop in prices to a 2-1/4 month low, and (3) comments from Qatari Oil Minister Saleh Al who said crude supplies are "very healthy."

                Bullish factors included (1) the stronger-than-expected Apr US nonfarm payrolls and Mar German industrial production, which is positive for energy consumption and demand, and (2) the rally in the stock market which bolsters the outlook on the economy and fuel demand.

[setravis]

Tuesday, May 10, 2011...

Today's Market Focus

•   June 10-year T-notes this morning are down -6.5 ticks. T-note prices yesterday erased early losses and closed higher on increased safe-haven demand after S&P cut Greece's credit rating: TYM11 +6, FVM11 +4.7, EDU11 +1.0.

                Bullish factors included (1) increased safe-haven demand for Treasuries after S&P cut Greece's credit rating 2 levels to B from BB- and said further reductions are possible, (2) concern the European sovereign-debt crisis may worsen, which boosted safe-haven demand for Treasuries after credit-default swaps to insure Greek and Irish government debt rose to records, and (3) the Fed's action to purchase $7.24 billion of Treasuries as part of its QE2 asset-purchase program.

                Bearish factors included (1) strength in stocks which reduced the safe-haven demand for Treasuries, 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 stronger with the dollar/yen +0.29 yen and the euro/dollar -0.27 cents. The dollar index yesterday fell back from a 2-1/2 week high and closed lower on speculation the ECB will continue to raise interest rates despite an escalation in European sovereign-debt concerns: Dollar Index -0.104, USDJPY -0.272, EURUSD +0.00503.

                Bearish factors included (1) strength in Mar German exports which rose more than expected to their highest level since records began in 1950 and is euro supportive, and (2) stock market strength that sapped the safe-haven demand for the dollar.

                Bullish factors included (1) early weakness in the euro after S&P cut Greece's credit rating 2 levels to B from BB- and said further reductions are possible, (2) weakness in the British pound which fell to a 2-1/2 week low against the dollar after the Confederation of British Industry lowered its economic growth estimates for the UK to 1.7% annualized from a Feb forecast of 1.8% annualized, and (3) the larger-than-expected decline in the May Euro-Zone Sentix investor confidence which fell to its lowest level in 4 months and is euro negative.



•   June crude oil prices this morning are trading down -75 cents a barrel and June gasoline is up +9.31 cents per gallon. Jun gasoline climbed to a 1-week high in overnight trade amid concern that flooding of the Mississippi River will disrupt fuel production and distribution. Crude oil and gasoline prices yesterday closed sharply higher on signs the global economic recovery remains intact: CLM11 +$5.37, RBM11 +18.83.

                Bullish factors included (1) the increase in Mar German exports to a record, which signals economic strength and is positive for energy consumption and demand, (2) the warning from Petromatrix Gmbh that US supplies of crude and petroleum products may be curtailed by record high water levels on the Mississippi river that may also force a closure of riverside refineries, (3) comments from Qatar's Oil Minister who said the world economy isn't weak enough to justify a freefall in crude prices, and (4) the action by JPMorgan Chase to raise the WTI crude oil pric e forecast for 2011 to $109.50 a barrel from $99 because OPEC and other producers aren't matching rising demand and consumers will take time to react to higher prices.

                Bearish factors included (1) the early rally in the dollar index to 2-1/2 week high, which eroded investment demand in commodities, and (2) concern the European debt crisis may worsen and start to negatively effect fuel demand after S&P cut Greece's debt rating 2 levels to B on restructuring concerns.

[setravis]

Wednesday, May 11, 2011...

Today's Market Focus

•   June 10-year T-notes this morning are down -8.5 ticks. T-note prices yesterday traded sideways to lower throughout the day as stock market strength along with strong import prices weakened T-note prices: TYM11 -12, FVM11 -8.5, EDU11 +1.0.

                Bearish factors included (1) the stronger-than-expected Apr import prices (+2.2% m/m and +11.1% y/y versus expectations of +1.8% m/m and +10.4% y/y), (2) a rally in stocks which reduced the safe-haven demand for Treasuries, and (3) supply pressures ahead of the Treasury's $24 billion auction of 10-year T-notes on Wednesday.

                Bullish factors included (1) comments from Richmond Fed President Lacker who said US "home prices are likely to remain under pressure" and that many sectors of the economy remain in the "doldrums," and (2) strong demand for the Treasury's $32 billion auction of 3-year T-notes that had a bid-to-cover ratio of 3.29, stronger than the 3.16 average of the last 12 auctions.



•   The dollar index this morning is slightly higher with the dollar/yen +0.13 yen and the euro/dollar -0.45 cents. The dollar index yesterday fluctuated between small gains and losses throughout the day and finished slightly lower as strong equity prices reduced the safe-haven demand for the dollar while concerns over the solvency of Greece underpinned the dollar: Dollar Index -0.126, USDJPY +0.524, EURUSD +0.00441.

                Bearish factors included (1) reduced safe-haven demand for the dollar as stock prices firmed, and (2) the report from the Greek newspaper Kathimerini that the IMF is arranging a package of as much as 100 billion euros ($144 billion) to replace Greece's existing bailout, which reduced European sovereign-debt concerns.

                Bullish factors included (1) the unexpected declines in Mar French industrial and manufacturing production, which is euro negative, and (2) the view from the chief economist at Citigroup that any further lending to Greece would be futile and amou nt to "Ponzi finance" as it only buys more time until Greece must restructure its debt.



•   June crude oil prices this morning are trading down -72 cents a barrel and June gasoline is -5.39 cents per gallon. Crude oil and gasoline prices yesterday finished higher on strong China exports and from a rally in gasoline after Jun gasoline climbed to a 1-week high amid concern that flooding of the Mississippi River will disrupt fuel production and distribution: CLM11 +$1.33, RBM11 +10.13.

                Bullish factors included (1) the strength in Apr China exports which rose to a record and indicates economic strength that is positive for energy consumption and demand, (2) strength in gasoline on concern that the worst flooding of the Mississippi River in 75 years may shut 11 refiners between New Orleans and Baton Rouge with a combined capacity of 2.5 million barrels a day, or 13% of US output, and (3) the rally in equities, which bolsters optimism in the economic outlook and energy demand.

                Bearish factors included (1) the action by CME Group to raise trading margins on crude o il and energy futures traded on NYMEX, which may lead to liquidation of positions by investors to raise funds, and (2) the outlook for US crude supplies to increase to near a 2-year high when the DOE releases weekly inventory figures on Wed. Expectations for the weekly DOE inventories are crude oil supplies to increase +1.5 million bbl, gasoline stockpiles to fall -500,000 bbl, distillate inventories to remain unchanged and the refinery utilization rate to rise +0.4 to 83.2%.

[setravis]

Thursday, May 12, 2011...

Today's Market Focus

•   June 10-year T-notes this morning are up +5 ticks. T-note prices yesterday erased early losses and closed higher as the stock market plunged and after decent demand was seen at the Treasury's $24 billion auction of 10-year T-notes: TYM11 +10/5, FVM11 +7.2, EDU11 +0.5.

                Bullish factors included (1) increased safe-haven demand for Treasuries as the stock market plummeted, and (2) strong demand for the Treasury's $24 billion auction of 10-year T-notes that were auctioned at a yield of 3.21%, below the 3.22% the market was expecting.

                Bearish factors included (1) global inflation concerns after Apr China consumer prices rose more than expected, Apr German CPI was unexpectedly revised up to a 2-1/2 year high and the BOE said in its quarterly inflation report that inflation remains "uncomfortably high," and (3) supply pressures ahead of the Treasury's $16 billion auction of 30-year T-bonds on Thursday.



•   The dollar index this morning is stronger and at a 3-1/2 week high with the dollar/yen -0.13 yen and the euro/dollar -0.46 cents. The dollar index yesterday climbed to a 3-week high on increased safe-haven demand as the stock market fell on concern that European leaders are balking at providing Greece with additional aid: Dollar Index +0.716, USDJPY +0.169, EURUSD -0.02176.

                Bullish factors included (1) weakness in the euro which fell to a 3-week low against the dollar after German Chancellor Merkel said Greece needs to stay the course on its budget-cutting program to deserve an extension of the 110 billion-euro ($158 billion) bailout granted last year, which fuels concern that European leaders are hesitating in granting Greece additional aid, which may force Greece to restructure its debt, and (2) increased safe-haven demand for the dollar as the stock market fell.

                Bearish factors included (1) concern that the ECB may tighten monetary policy further after Apr German c onsumer prices were unexpectedly revised up to a gain of +2.7% y/y, a 2-1/2 year high, and (2) the larger-than-expected Mar US trade deficit which widened to its most in 9 months (-$48.2 billion) and is dollar negative.



•   June crude oil prices this morning are trading down -$2.17 a barrel and June gasoline is -4.68 cents per gallon after the IEA cut its 2011 global oil demand forecast. Crude oil and gasoline prices yesterday tumbled as the dollar strengthened and after US crude supplies rose to a 2-year high: CLM11 -$5.67, RBM11 -25.69.

                Bearish factors included (1) the rally in the dollar index to a 3-week high, which reduces investment demand in commodities, (2) the larger-than-expected increase in weekly DOE crude inventories to their highest level in 2 years (+3.78 million bbl to 370.3 million bbl versus expectations of +1.5 million bbl), (3) the unexpected increase in weekly gasoline supplies which rose for the first time in 12 weeks (+1.27 million bbl versus expectations of -500,000 bbl), (4) slack demand after total US fuel demand slipped -0.9% w/w to 18.2 million barrels a day, the lowest in 23 months, and (5) concern that Chinese fuel demand may slow on speculation it will furth er tighten monetary policy to cool price increases after Apr China consumer prices rose more than expected.

                Bullish factors included (1) the unexpected decrease in weekly distillate inventories (-843,000 bbl versus expectations of no change), and (2) concern that the worst flooding of the Mississippi River in 75 years might limit US gasoline supplies as it may force the closure of 11 refiners between New Orleans and Baton Rouge with a combined capacity of 2.5 million barrels a day, or 13% of US output.

[setravis]

Friday, May 13, 2011...

Today's Market Focus

•   June 10-year T-notes this morning are unchanged. T-note prices yesterday fluctuated between gains and losses until early afternoon when weak demand at the Treasury's 30-year T-bond auction sent prices tumbling into the close: TYM11 -8, FVM11 -4.2, EDU11 +0.5.

                Bearish factors included (1) the larger-than-expected increase in Apr PPI (+0.8% m/m and +6.8% y/y versus expectations of +0.6% m/m and +6.5% y/y) with the +6.8% y/y increase the biggest in 2-1/2 years, (2) the as-expected Apr US retail sales (+0.5% and +0.6% less autos), along with the upward revision to Mar (+0.9% and +1.2% less autos versus the originally reported +0.4% and +0.8% less autos), (3) weak demand for the Treasury's $16 billion auction of 30-year T-bonds that had a bid-to-cover ratio of 2.43, below the 2.83 average of the past 12 auctions, and (4) comments from Philadelphia Fed President Plosser who said the US economic recovery is nearing a point where the Fed may start to tighten in the "n ot-too-distant future."

                Bullish factors included (1) the smaller-than-expected decline in weekly initial unemployment claims (-44,000 to 434,000 versus expectations of a decline to 430,000), and (2) comments from the chairman of CIC International, the Hong-Kong based unit of China's $300 billion sovereign wealth fund, who said US Treasuries are a safe investment, which eases concern that China will stop purchasing US debt because of the weak dollar.



•   The dollar index this morning is weaker with the dollar/yen -0.26 yen and the euro/dollar +0.33 cents. The dollar index yesterday fell back from a 3-1/2 week high and closed lower after commodities and stocks rebounded from early losses, which reduced the safe-haven demand for the dollar: Dollar Index -0.087, USDJPY -0.109, EURUSD +0.00539.

                Bearish factors included (1) a rebound in commodities and stocks which shed early losses and reduced the safe-haven demand for the dollar, and (2) the recovery in the euro which bounced off of a 1-1/4 month low and finished higher on reduced Greek debt concerns after former ECB Vice President and current adviser to the Greek government, Lucas Papademos, said that Greece's exit from the EU was a "non-issue" and that the Greek asset privatization plan could ultimately exceed the announced 50 billion euros ($70.1 billion).

                Bullish factors included (1) comments from ECB Executive Board member Tumpel-Gugerell who said other co untries will be asked to help Greece as the country will need "longer" to be able to refinance itself via the markets, (2) early weakness in the euro which fell to a 1-1/4 month low against the dollar after Mar Euro-Zone industrial production unexpectedly declined.



•   June crude oil prices this morning are trading up +$1.00 a barrel and June gasoline is +2.91 cents per gallon. Crude oil and gasoline prices yesterday fell early after the IEA cut its 2011 global oil demand forecast but recovered theirs losses and finished mixed after the dollar retreated from a 3-1/2 week high: CLM11 +$0.76, RBM11 -5.89.

                Bullish factors included (1) a reversal in the dollar which fell back from a 3-1/2 week high and closed lower, which boosts investment demand in commodities, and (2) concern that the worst flooding of the Mississippi River in 75 years might limit US gasoline supplies as it may force the closure of 11 refiners between New Orleans and Baton Rouge with a combined capacity of 2.5 million barrels a day, or 13% of US output.

                Bearish factors included (1) the action by the IEA to cut its 2011 global oil demand forecast by -190,000 barrels a day saying "high oil prices have finally begun to dent demand," and (2) concern that the act ion by the PBOC to raise banks' reserve requirements for the fifth time this year to a record high 21% will slow the Chinese economy and its energy demand.

[setravis]

Monday, May 16, 2011...

Today's Market Focus

•   June 10-year T-notes this morning are up +7 ticks. T-note prices last Friday moved higher on reduced inflation concerns along with increased safe-haven demand after the stock market slumped: TYM11 +10.5, FVM11 +5.7, EDU11 -1.5. The 10-yer T-note yield matched its 5-1/4 month low of 3.129%.

                Bullish factors included (1) reduced inflation concerns after the Apr core CPI came in at expectations (+0.2% m/m and +1.3% y/y), (2) increased safe-haven demand for Treasuries as the stock market sold off, and (3) a post refunding rally as bond dealers covered short positions put on during the Treasury's $72 billion May refunding auctions of T-notes and T-bonds.

                Bearish factors included (1) the larger-than-expected increase in May US University of Michigan consumer confidence (+2.6 to 72.4 versus expectations of +0.2 to 70.0), and (2) the +3.2% y/y increase in Apr CPI, stronger than expectations of +3.1% y/y and the biggest year-over-year increase in 2-1/2 years.



•   The dollar index this morning is stronger and at a 1-1/4 month high with the dollar/yen +0.10 yen and the euro/dollar -0.16 cents. The dollar index last Friday recovered from early losses and surged to a 1-1/4 month high and closed higher on increased safe-haven demand for the greenback as stock prices slid: Dollar Index +0.517, USDJPY -0.160, EURUSD -0.01290.

                Bullish factors included (1) increased safe-haven demand for the dollar after stock prices tanked, and (2) the larger-than-expected increase in May US University of Michigan consumer confidence.

                Bearish factors included (1) the stronger-than-expected Q1 Euro-Zone GDP, which is euro supportive, and (2) strength in the yen after Japanese Economy and Fiscal Policy Minister Yosano said the yen's strength was the result of the dollar weakening, not the yen gaining independently, which fueled speculation that the BOJ nor the G-7 will intervene in currency markets to slow the yen's gains.



•   June crude oil prices this morning are trading down -$1.69 a barrel and June gasoline is -4.39 cents per gallon. Crude oil and gasoline prices last Friday settled higher but well off of their best levels as weak equities and a stronger dollar offset strength in demand from robust Q1 European economic growth: CLM11 +$0.68, RBM11 +1.05.

                Bullish factors included (1) the stronger than expected Q1 Euro-Zone GDP, which is positive for energy demand and consumption, (2) the prediction from Goldman Sachs that the oil market is "structurally bullish" and prices are likely to be higher in 12 months, and (3) concern that the worst flooding of the Mississippi River in 75 years may threaten US gasoline production as refiners in the Mississippi Delta region may be forced to close.

                Bearish factors included (1) the rally in the dollar index to a 1-1/4 month high, which reduces investment demand in commodities, and (2) the sell-off in stock prices, which undercuts confidence in the economic outlook and energy demand.

[setravis]

Tuesday, May 17, 2011...

Today's Market Focus

•   June 10-year T-notes this morning are down -2 ticks. T-note prices yesterday finished higher on weaker-than-expected economic data and on increased safe-haven demand as the stock market fell on concern over Greece's solvency: TYM11 +8, FVM11 +6.7, EDU11 +1.0.

                Bullish factors included (1) comments from Atlanta Fed President Lockhart who said it's too early to consider an exit from record stimulus until the recovery becomes "more clearly sustainable," (2) increased safe-haven demand for Treasuries on concern the European sovereign-debt crisis may worsen as European leaders and the IMF met in Brussels to discuss additional aid to Greece, (3) the weaker-than-expected May Empire manufacturing index (-9.8 to 11.9 versus expectations of -1.7 to 20.0), and (4) the unexpected stagnation in the May NAHB housing market index (unchanged at 16 versus expectations of +1 to 17).

                Bearish factors included (1) concern that foreign demand for US Treasuries way wane the lon ger that US legislators play political games with the extension of the US debt ceiling, and (2) the weaker-than-expected Mar net long-term TIC flows, which shows reduced foreign demand for US dollar assets, including Treasuries.



•   The dollar index this morning is lower with the dollar/yen +0.80 yen and the euro/dollar +0.40 cents. The dollar index yesterday retreated from a 1-1/4 month high and closed lower on concern the economy is slowing and after global demand for dollar assets weakened in March: Dollar Index -0.287, USDJPY +0.011, EURUSD +0.00392.

                Bearish factors included (1) the smaller-than-expected increase in the Mar net long-term TIC flows, which rose at the slowest pace in 14 months and signals weakened foreign demand for US dollar assets, (2) weaker-than-expected US economic data on May Empire manufacturing and the May NAHB housing market index, which is dollar negative as it suggest a possible slowdown in the US economy that may prompt the Fed into maintaining its overly easy monetary policy, and (3) the increase in Apr Euro-Zone CPI to +2.8% y/y, its fastest pace in 2-1/2 years, which boosts pressure on the ECB for further interest rate hikes.

                Bullish factors included (1) increase d safe-haven demand for the dollar on concern the European sovereign-debt crisis may worsen as European leaders and the IMF met in Brussels to discuss additional aid to Greece, and (2) a possible increase in safe-haven demand for the dollar after Moody's Investors Service warned that a Greek default would be "highly destabilizing" for banks and undermine global capital markets as it would cause losses that "far exceed" the size of banks' loans and investments there.



•   June crude oil prices this morning are trading down -1 cent a barrel and June gasoline is +1.05 cents per gallon. Crude oil and gasoline prices yesterday closed lower after the opening of a Louisiana spillway reduced concerns that refiners along the Mississippi will be forced to close along with demand concerns after the release of weaker-than-expected US economic data: CLM11 -$2.28, RBM11 -14.33. Jun gasoline fell to a 2-month low.

                Bearish factors included (1) concern the European sovereign-debt crisis may worsen and slow the global economy and energy demand as European leaders and the IMF met in Brussels to discuss additional aid to Greece, (2) weaker-than-expected US economic data on May Empire manufacturing and the May NAHB housing market index, which signals a possible slowdown in the US economy that may curtail fuel demand, (3) reduced concerns that refineries along the Mississippi River delta will be forced to close after flood gates on the Morganza floodway in Louisiana were opened to reduce pressure on the Mississippi River system, and (4) the prediction from the global head of research at Bank of America-Merrill Lynch that oil prices will fall in the second half of this year as current high prices begin to cause "demand destruction."

                Bullish factors included (1) the reversal in the dollar index which retreated from a 1-1/4 month high and closed lower, and (2) concern that the worst flooding of the Mississippi River in 75 years may force refiners located near the Mississippi Delta region to close, which would disrupt US gasoline supplies.

[setravis]

Wednesday, May 18, 2011...

Today's Market Focus

•   June 10-year T-notes this morning are up +3 ticks. T-note prices yesterday rallied to a 5-1/4 month high after Apr US housing starts unexpectedly fell and industrial output stalled: TYM11 +6, FVM11 +3.5, EDU11 unchanged. The yield on the 10-year T-note fell to a 5-1/4 month low of 3.096%.

                Bullish factors included (1) the unexpected decline in Apr US housing starts and building permits (housing starts -10.6% to 523,000 versus expectations of +3.5% to 568,000 and building permits -4.0% to 551,000 versus expectations of +0.9% to 590,000), (2) the unexpected stalling in Apr industrial production (unchanged versus expectations of +0.4%), (3) the unexpected decline in Apr capacity utilization (-0.1 to 76.9% versus expectations of +0.2 to 77.6%), and (4) the action by the Fed to purchase $6.41 billion in Treasuries as part of its QE2 asset-purchase program.

                Bearish factors included (1) carry-over weakness from a drop in Gilts after Apr UK CPI climbed +4.5% y/y, stronger than expectations of +4.1% y/y and the fastest pace of increase in 2-1/2 years, and (2) reduced safe-haven demand for Treasuries after credit-default swaps to insure European government debt fell to a 5-week low on speculation that European leaders were making headway in solving the region's sovereign-debt crisis.



•   The dollar index this morning is lower with the dollar/yen -0.27 yen and the euro/dollar +0.06 cents. The dollar index yesterday finished slightly lower on weak US economic data and after European sovereign debt concerns eased: Dollar Index -0.071, USDJPY +0.625, EURUSD +0.00809.

                Bearish factors included (1) weaker-than-expected US economic data on Apr US housing starts and industrial production, which indicates economic weakness and is dollar negative, (2) reduced European debt concerns after credit-default swaps to insure European government debt fell to a 5-week low, and (3) euro supportive comments from ECB Executive Board member Tumpel-Gugerell who said interest rates should be consistent with economic activity, which suggests she sees room for further monetary tightening.

                Bullish factors included (1) weakness in the yen which fell to a 2-1/2 week low against the dollar after BOJ Governor Shirakawa said the Japanese economy is in a "very severe" state, which fueled speculation that monetary policy may be eased further, and (2) the weaker-than-expected May German ZEW economic sentiment which fell to its lowest level in 6 months and is euro negative.



•   June crude oil prices this morning are trading up +$1.27 a barrel and June gasoline is +3.08 cents per gallon. Crude oil and gasoline prices yesterday closed lower for a second day after weaker-than-expected economic data stoked demand concerns while the opening of the Morganza floodway reduced concerns about flooding to refineries along the Mississippi River: CLM11 -$0.46, RBM11 -1.18. Jun crude slipped to a 1-1/2 week low and Jun gasoline fell to a 2-month low.

                Bearish factors included (1) the weaker-than-expected US economic data on Apr US housing starts and industrial production, which indicates the economy and fuel demand may slow, (2) reduced concerns that refineries along the Mississippi River delta will be forced to close after flood gates on the Morganza floodway in Louisiana were opened to reduce pressure on the flooded Mississippi River system, and (3) the outlook for increased supplies when the DOE releases its weekly inventory figures on Wed. Expectation s for Wednesday's weekly DOE inventory report are for crude oil supplies to advance +1.7 million bbl, gasoline stockpiles to rise +1.0 million bbl, distillate inventories to increase +500,000 bbl and the refinery utilization rate to rise +0.4 to 82.1% of capacity.

[setravis]

Thursday, May 19, 2011...

Today's Market Focus

•   June 10-year T-notes this morning are down -6.5 ticks. T-note prices yesterday trended lower the entire day as the stock market rallied and after hawkish comments from St. Louis Fed President Bullard and the FOMC meeting minutes prompted long liquidation in Treasuries: TYM11 -13, FVM11 -8.5, EDU11 -2.0.

                Bearish factors included (1) reduced safe-haven demand for Treasuries as the stock market rallied, (2) hawkish comments from St. Louis Fed President Bullard who said "I still think is reasonable" to expect Fed tightening by the end of the year, and (3) the Apr 26-27 FOMC meeting minutes in which policy makers discussed a process for withdrawing record stimulus.

                Bullish factors included (1) the action by the Fed to purchase $1.81 billion of Treasuries as part of its QE2 asset-purchase program, and (2) the prediction from Nomura that the 10-year T-note yield may fall to 2.90% in the next few weeks will as equities and commodities decline as the end of QE2 l ooms next month.



•   The dollar index this morning is weaker with the dollar/yen +0.20 yen and the euro/dollar +0.16 cents. The dollar index yesterday rebounded from early losses and finished higher after the Apr-26-27 FOMC meeting minutes revealed that Fed members began to coalesce on a strategy to begin removing record stimulus: Dollar Index +0.076, USDJPY +0.261, EURUSD +0.00125.

                Bullish factors included (1) the Apr-26-27 FOMC meeting minutes in which Fed members discussed exit strategies from record stimulus measures, (2) weakness in the British pound which fell to a 1-1/4 month low against the dollar after minutes from the BOE monetary policy meeting earlier this month showed policy makers voted 6-3 to keep interest rates on hold, (3) dollar supportive comments from St. Louis Fed President Bullard who said "I still think is reasonable" to expect Fed tightening by the end of the year, and (4) the -0.3% decline in Mar Euro-Zone construction output which fell for a second month and is euro negative.

                Bearish factors included (1) the rally in the stock market, which reduced the safe-haven demand for the dollar, and (2) euro supportive comments from EU Economic and Monetary Affairs Commissioner Rehn who said the base of the European economic expansion is "broadening from exports to domestic demand and thus the recovery is becoming more solid and self-sustaining."



•   June crude oil prices this morning are trading up +34 cents a barrel and June gasoline is +0.63 of a cent per gallon. Crude oil and gasoline prices yesterday rallied sharply after an unexpected decline in weekly crude and distillate inventories and an increase in US gasoline demand: CLM11 +$3.19, RBM11 +3.62.

                Bullish factors included (1) the unexpected decline in weekly DOE crude inventories (-15,000 bbl versus expectations of +1.7 million bbl), (2) the unexpected decline in weekly DOE distillate supplies which fell to a 2-year low (-1.16 million bbl to 143.1 million bbl versus expectations of +500,000 bbl), (3) the smaller-than-expected climb in weekly gasoline inventories (+119,000 bbl versus expectations of +1.0 million bbl), (4) the +2.5% increase in weekly US gasoline demand to 9.05 million barrels a day, the first gain in 3 weeks, and (5) the prediction from Oilchem.net that China's fuel supplies may tighten as its largest refineries shut about 7% of their capaci ty in Q3 for scheduled maintenance.

                Bearish factors included (1) the stronger dollar, which reduces investment demand in commodities, and (2) the larger than expected increase in the US refinery utilization rate which climbed to its highest level in 1-1/2 months and bodes well for increased production of gasoline and distillate supplies in the weeks ahead (+1.5 to 83.2% versus expectations of +0.4 to 82.1%).