Morning Call For February 3, 2015

Mar 10-year T-notes (ZNH15 -0.25%) this morning are down -13 ticks. Mar 10-year T-note futures prices on Monday closed higher. Closes: TYH5 +1.50, FVH5 +0.25. Bullish factors included (1) concern about a slowdown in the U.S. economy after the Jan ISM manufacturing PMI fell more than expected and expanded at the slowest pace in a year, (2) the bigger-than-expected -0.3% m/m decline in U.S. Dec personal spending, the most in 5-1/4 years, and (3) deflation concerns after the Dec core PCE deflator rose +1.3% y/y, the slowest pace of increase in 9 months.

The dollar index (DXY00 -0.05%) this morning is unchanged. EUR/USD (^EURUSD) is up +0.0004 (+0.04%). USD/JPY (^USDJPY) is down -0.21(-0.18%). The dollar index on Monday closed lower: Dollar index +0.022 (+0.02%), EUR/USD +0.00675 (+0.60%), USD/JPY +0.107 (+0.09%). Bearish factors included (1) concern that U.S. growth is slowing which may prompt the Fed to delay interest rate hikes after the Jan ISM manufacturing PMI expanded at the slowest pace in a year and (2) strength in EUR/USD after Greece's newly elected leaders gave assurances that Greece will abide by its financial obligations, which reduced concern that Greece will default on its debt and leave the Eurozone.

Mar WTI crude oil (CLH15 +2.52%) this morning is up +$1.69 (+3.41%) at a 2-week high and Mar gasoline (RBH15 +2.34%) is up +0.0441 (+2.86%) at a 1-1/4 month high. Mar crude oil and Mar gasoline on Monday closed higher with Mar crude at a 2-week high and Mar gasoline at a 5-week high: CLH5 +1.59 (+3.30%), RBH5 +0.0736 (+4.98%). Bullish factors included (1) a weaker dollar, (2) concern that gasoline production will decline as a strike by U.S. oil refinery workers that account for 10% of U.S. refining capacity entered its second day.

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