SCOREBOARD: Top treasuries

News and data flow were comparatively light last night although US treasuries managed to find a decent bid. The 10-year yield for, instance, dropped 7 basis points to be at 2.29 per cent, the 5-year fell about 6 basis points to 1.13 per cent, while the 2-year was down 2 basis points (0.38 per cent).

No major factors at play here, more a confluence of small ones. Existing home sales fell 0.9 per cent in February (plus 0.9 per cent expected) after a 5.7 per cent gain in January. This data didn't really spark anything though – that January figure was revised up from 4.57 million sales to 4.63 million and so February sales at 4.59 million weren't too different from expectations (4.61 million). More to the point, the rally actually began before the US open. That said, the headlines certainly didn't help. Aussie futures obviously followed the US lead and as I write, the 10s are 6 ticks higher (95.715) and the 3s are 4 ticks (96.280).

In forex land, the US dollar index pushed marginally higher, was up 0.5 per cent at the high, before easing off a touch to be 0.3 per cent higher (from 1630 AEDT) as I write. So the Australian dollar was weaker (almost 30 pips to 1.0452) and euro fell too (about 65 pips from 1630) and sits at 1.3207. Sterling had a more whippy session what with the budget and BoE minutes out, and managed to ease 10 pips (1.5864) from 1630 AEDT or 60 pips from the high of 1.5917. The catalyst for the turn was the deterioration in public sector borrowing in February with expectations for an £8 billion lift eclipsed by a £15 billion requirement. Then the minutes showed that two members of the MPC Posen, predictably, and also Miles, wanted to print an additional £25 billion. Madness.

Not much to say on the equity space. Europe was mixed around zero with the Dax up 0.2 per cent, the CaC down 0.1 per cent and the FTSE up 0.01 per cent. Not much more action in the US. The S&P went between plus 0.2 per cent and negative 0.3 per cent and finished 0.2 per cent lower. Energy, financials and utilities were the key underperformers which managed to just offset modest gains in telecommunications and consumer stocks. The Dow was otherwise 45 points lower (13124), the Nasdaq was 0.04 per cent higher (3075), while our own SPI was flat (4264).

Commodities were also pretty mixed and while WTI pushed (0.7 per cent to $106.8) following a US report suggesting crude inventories fell last week, Brent conversely fell 0.1 per cent ($123.9). As for metals, gold did little (down smalls to $1649), copper rose 0.4 per cent, while silver also rose about 1 per cent. That's it.

In other news. US mortgage applications fell 7.4 per cent in the week to March 16 with purchases down 1 per cent and refinancings down 9 per cent. Bernanke spoke again, but didn't say too much that was new. Other than that, the UK budget was released overnight and the key features included a reduction in the 50 per cent top tax rate to 45 per cent which the government said hadn't brought in as much as expected. The UK was expected to avoid a recession and growth for 2012 was forecast at 0.8 per cent, which was then expected to rise to 2 per cent in 2013. Borrowing was expected to be £126 billion in 2012-13 and forecast to all to £21 billion by 2016-17.

The day kicks off with NZ GDP at 0845 AEDT, with the median market expectation for a rise of 0.6 per cent which is about where I expect it be also. At 0910 AEDT RBA assistant governor Debelle speaks about "Bank Funding” and then there is some Japanese trade data just before 1100 AEDT. That's about it for our region. Tonight it's worth watching the eurozone PMIs and industrial orders and then in the UK retail sales are out. In the US, jobless claims take centre stage but we also see some house price data.

Adam Carr is senior economist at ICAP Australia. See Business Spectator's glossary for definitions of technical terms used in SCOREBOARD articles.

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