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Treasuries Rise on Mixed Economic Data, Yellen Anticipation


Today's financial recap and tomorrow's financial outlook.


Initial jobless claims were 274,000 last week, slightly missing the 270,000 consensus.

The Chicago Fed National Activity Index was -0.15 vs. the expected flat reading.

Markit US Manufacturing PMI, Philadelphia Fed Business Outlook, Kansas City Fed Manufacturing and Existing Home Sales data also failed to meet Wall Street's expectations.

On the plus side, the Conference Board Leading Index was 0.7%, handily beating expecations for April, and March's number was revised up.

The overall weak data seems to support the notion that first-quarter economic weakness, which the Fed has called "transitory," is extending into the second quarter.

In turn, the data-dependent Fed could delay rate hikes. Most traders expect the first increase to happen in September or December, though increasingly, some think 2016 is a possibilty.

Treasuries also benefited from the perception that Fed Chair Janet Yellen may issue dovish remarks at her speech in Rhode Island tomorrow.

The 10-year US yield fell 5.5 bps to 2.193% and the iShares 20+ Year Treasury Bond ETF (TLT) rose 1.4% to $120.35.

Despite a late-day rally, the S&P 500 failed to make a fourth straight all-time high. However, it did make a new record closing hgh at 2130.85, finishing up 0.2%.

The NASDAQ Composite outperformed with a 0.4% rally.

Cybersecurity stocks were notably strong after the CEOs of FireEye (FEYE) and Cyber-Ark Software (CYBR) both said they expect the industry to consolidate through mergers and acquisitions.

The PureFunds ISE Cyber Security ETF (HACK) rose 0.6%.

Apple (AAPL) saw a 1.0% rally to $131.39 after Morgan Stanley increased its earnings estimates due to momentum in the company's iPhone and Watch businesses.

Financials were weak as lower interest rates cut into their profit margins. Biotech also underperformed as traders took profits after a strong day yesterday.

On the earnings front, Best Buy (BBY) powered up 3.9% to $35.11 on its strong first-quarter earnings report. Best Buy benefited from strong demand for smartphones and televisions.

Friday's Financial Outlook

The two big events on tomorrow's calendar are the April Consumer Price Index report at 8:30 a.m. ET, and Fed Chair Yellen's speech at 1:00 p.m., both of which could drive volatility in stocks and bonds.

The Baker Hughes Rig Count will be releasd at 1:00 p.m. and will be of interest to energy traders.

Germany will deliver GDP and IFO Business Climate numbers early in the morning.

Ann Inc. (ANN), Campbell Soup (CPB), Deere (DE), and Foot Locker (FL) will report earnings before the open.

No positions in stocks mentioned.
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