Commentary as of July 28, 2010

Today's Data

Currencies

The Yen advanced against most of its major counterparts as evidence of a global economic slowdown discouraged demand for higher-yielding assets. Australia's dollar slid against the yen and dollar after a report showed the nation's consumer prices increased in the second quarter less than economists forecast, supporting the case for the central bank to keep interest rates unchanged. The euro erased its gain versus the yen before a U.S. report on durable goods orders as stocks fell. "The yen strengthened as risk appetite turned around according to Royal Bank of Canada, London. "The Aussie weakened initially on the soft CPI data." The euro was little changed at 114.13 yen at 7:02 a.m. in New York, compared with 114.24 yesterday, after earlier rising 0.4 percent to 114.74, the highest level since May 18.

Capital Markets

U.S. 10-year Treasury notes rose on speculation a Federal Reserve report will show the U.S. recovery is slowing, reinforcing expectations for the central bank to keep interest rates at a record low. The yield on five-year securities slipped before a sale of $37 billion of the debt today, the second of three note auctions this week totaling $104 billion. Gains were tempered by company earnings that exceeded analyst estimates and damped demand for the safest fixed-income assets. "The Fed report is expected to confirm there's still that high degree of uncertainty about the U.S. recovery and the uncertainty is giving some support to Treasuries," according to Credit Agricole Corporate & Investment Bank, London.The benchmark 10-year yield was two basis points lower at 3.03 percent as of 6:30 a.m. in New York, according to BGCantor Market Data. The 3.5 percent security due May 2020 rose 4/32, or $1.25 per $1,000 face amount, to 103 30/32. The five-year yield slipped two basis points to 1.77 percent.