Market Update - 18 Feb 2013

• Treasuries extended a weekly decline after reports showing increases in manufacturing in the New York region and consumer confidence added to optimism the U.S. economy is gaining momentum.

• Yields on benchmark 10-year bonds climbed above 2 percent after the Federal Reserve Bank of New York’s general economic index unexpectedly increased to 10, the highest since May 2012.
  
• The Thomson Reuters/University of Michigan preliminary index of consumer sentiment rose to a three-month high. The University of Michigan index of consumer sentiment advanced to 76.3 in February from 73.8 the prior month. Economists in a Bloomberg poll forecast a rise to 74.8. It’s another piece of reasonably good data.
  

• USDMYR still hovering around 3.1000 pivot point with the news on the G10s so far driving the pair. Short term personally I still expect more upside unless there is some gam changing event.

• Spanish and Italian bonds rose as debt sales this week allayed concern the nations may struggle to raise funds amid political instability before Italy goes to the polls to elect a new prime minister.
  

• Yields on Spain’s 10-year bonds fell for the first week in five as European Central Bank President Mario Draghi said the country had achieved “enormous progress” in its reforms.
  
• Demand for the nations’ securities was also buoyed as a report showed industrial production in the euro-area rose more than economists forecast. Spain exceeded the Madrid-based Treasury’s sales target when it auctioned six- and 12-month bills on Feb.12.

• Italy sold bonds on Feb. 13 in its last offering before the Feb. 24-25 elections. German bunds declined.