Bond and equity report for Nov. 5

SUMMARY OF UPCOMING DATA 11/05/09

  • 8:30 AM US WEEKLY JOBLESS CLAIMS (523K)
  • US PRDUCTIVITY, UNIT LABOR COSTS (6.3%, -3.9%)
  • 10:30 AM EIA INVENTORY (NAT GAS)

DATA RESULTS 11/04/09

  • ADP EMPLOYMENT REPORT (-203 K)
  • ISM NON-MFG INDEX (50.6 vs. 51.6)
  • 10:30 AM EIA INVENTORY (PETROLEUM) CL -3.4M
  • US 3 ($40B), 10 ($25B), 30 ($16B) YEAR NOTE ANNOUNCEMENTS

2:15 PM FOMC MEETING ANNOUNCEMENT (NO RATE CHANGE, MARKET EXPECTS TO KEEP CURRENT POLICY IN PLACE FOR EXTENDED PERIOD, EXPECT THAT WHEN TURN COMES, WILL COME FAST)

US DEBT REVIEW AND OUTLOOK

U.S. TREASURIES weakened for a third session as the FOMC announcement continued support the near zero interest rate policy it has maintained to support economic recovery. The announcement of $101 Billion of U.S. three-, 10-, and 30-year debt coming to market next week also help to weaken the appeal for government debt. Treasuries could follow the pattern of finding support going into the release of US employment data which despite showing signs of slowing down, continue to foster uncertainty and negative sentiment.

Treasuries were also pressured by strong earnings from the communications sector and a report showing that the U.S. service sector grew for the second consecutive month, though slightly lower than had been forecast.

Technically, U.S. Treasuries appear ready for a correction to the upside. Market could pull back to 118-28 on short covering. Outlook remains for the contract to move lower to test the 117-13 range.

U.S. EQUITY REVIEW AND OUTLOOK

U.S. EQUITIES posted a volatile session on Wednesday. Gains obtained after the FOMC meeting announced no change to its current near zero rate interest rate policy faded by the close as the markets quickly turned its sights toward Friday’s employment data. While today’s ADP reading continued to support the notion that the pace of job losses continues to slow- losses are not job or revenue creation.

The Federal Reserve kept its 0.0 to 0.25% Fed Funds rate target as the market expected. In addition, the ISM services index increased for a second consecutive month, though less than many analysts had forecast. Commentary released after the FOMC meeting stated that economic conditions are likely to warrant exceptionally low levels of the Fed Funds rate for an extended period. While this continues to bode well for financial institutions at some level, the markets may be beginning to ponder the question if these low rates will ever find their way to support economic growth and consumer debt relief.

Technically, Dec S&P futures remain range bound, with near term support beginning to form at 1032.00. 1022.00 remains as a key support level that the market will need to pierce in order to test the 1000 level. Significant resistance sets up at 1068.00, with 1103.00 remaining as the key breakout level.

US DEBT FUTURES

OPEN

HIGH

LOW

CLOSE

CHANGE

US Z9 (US 30 YRS)

119-07

119-07

117-29

119-02

-24/32nds

SP Z9 (S&P 500)

1050.20

1058.30

1041.50

1047.00

+5.30

Prepared by Rich Roscelli & Paul Brittain.

PLEASE EMAIL QUESTIONS OR COMMENTS TO RICH@BINVSTGRP.COM

Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Commodity Trading School, its officers and directors may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

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