I was away for the 4th of July Independence Day weekend and was not able to write a commentary. However, my views on the Treasury and equity markets remains unchanged. I put together a short overview and Interest rate report. We will respond to specific email requests during the week.
We hope all our readers enjoyed a safe and enjoyable holiday weekend.
Overview: A shortened holiday week did not mean shortened activity. On the contrary, traders and investors alike all scrambled to either hedge their risk, “dump” some losers in their portfolio, and put some money in the “proverbial mattress”. Assuming there was any left after the last two weeks of market action. It’s always a nice feeling when one is correct in his observations and recommendations but unfortunately it was bittersweet feeling for me personally. Some of my readers and I imagine many investors lost money over the past few months while I was emphasising the necessity for hedging strategies. The “geniuses” who claim investors should not be concerned and should hold their investments for the “long haul” may have forgotten that it was 1954 the last time General Motors stock traded under $10 per share. The buy and hold recommendation is, without assessing economic and corporate forecasts, stupid in my opinion, and I see no reason to “take the ride” when it is easy enough to implement hedging strategies through the use of futures and options. That’s what I do for our clients.
Interest Rates: September Treasury bonds closed at 115 28/64ths, down 8/64ths after trading as high as 11604.5 during the session. The weak labor and service sectors data reduced concerns that the Federal Reserve would raise interest rates prompted the rally in treasuries. The European Central Bank raised its key interest rate to 4.25% from 4% as expected and that was a defacto decrease in U.S. rates relative to the ECB rate. We continue to recognize the value of the U.S. treasury market as a hedge against the U.S. recession and the decline in the U.S. dollar and equities. Add to long bond positions on any pullback.
John L. Caiazzo
Website: www.acuvest.com
E-mail: futures@acuvest.com
Information provided is from sources deemed to be reliable but not guaranteed. Futures and Options trading involve a high degree of risk and may not be suitable for everyone. John Caiazzo is a registered commodities broker with over 45 years experience in investments and opinions are his own and not of the Futures Commission Merchant he introduces his clients to.
