Bond & equity report for Dec. 1

SUMMARY OF UPCOMING DATA 12/01/09

10:00 AM ISM MFG INDX (55.0)

10:00 AM US CONSTR SPEND (-0.4%)

10:00 AM PENDING HOME SALES INDEX

DATA RESULTS 11/30/09

CHICAGO PMI (56.1 VS. 53.0)

U.S. DEBT REVIEW AND OUTLOOK

US TREASURIES posted a quiet session as concerns eased regarding the possible default of debt from Dubai World. The short end of the curve recorded the highest gains of the session, with 2 and 5 year notes offering a more attractive security haven as the markets yield appetite returned. U.S. 10 and 30 year futures failed to find any clear direction, as equities closed near their highs of the session supported by the release of a definitive price tag of Dubai debt that will be refinanced (remember, equity markets can go up on good or bad news- uncertainty is usually a catalyst for fixed income buying).

Traders were also reluctant to take on any large position in longer yielding debt ahead of the final readings of employment for 2009. Speculation suggests that the readings could suggest a significant slowdown of job losses, which of course will be open to significant review and criticism. Overall markets appear cautiously supportive of higher prices in the short term, particularly as new levels of uncertainty and an apparent push to drive down mortgage rates (an early Christmas present?) may support prices through January, 2010

Technically, December 30 year futures remain on the brink of overbought territory. Expecting some volatility as markets square up positions for roll to March contract. Expecting this contract to pullback to 122-06. Significant resistance at 124-17.

US EQUITY REVIEW AND OUTLOOK

US EQUITIES posted solid gains for November. The major indices closed near their highs of the session, after some of the specter of uncertainty regarding Dubai’s financial situation was lifted late in the trading session. Financial stocks led the recovery, as a report from Dubai World announced that the main focus of debt restructuring talks is revolving around $26 billion worth of debt. This figure was significantly smaller than the early speculation that resulted in significant losses in the global equity markets during the US Thanksgiving holidays. A retreat in the US dollar, as concerns regarding risk exposure subsided, also supported the late rebound in equity prices.

The retail sector struggled as the opening salvo of Holiday shopping offered a mixed picture to investors. Overall shopping traffic was higher, but actual spending was down from the same time period last year. The question remains if retailer’s strategies of inventory management will find a balance with the bargain conscious attitudes of holiday shoppers.

Technically, December S&P futures just above near term support at 1093.00. Chart set up suggest that the market may have some more downside to test. S&P futures seem likely to test 1080.50 as near term support. A break of this level sets up for downside movement to 1065.00 and 1059.00. Resistance for the contract sets up at 1103.00.

US DEBT FUTURES

OPEN

HIGH

LOW

CLOSE

CHANGE

US Z9 (US 30 YRS)

122-29

123-13

122-24

123-11

+5/32nds

SP Z9 (S&P 500)

1104.50

1106.50

1096.10

1103.10

-0.70

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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