Bond & equity report for Dec. 3

SUMMARY OF UPCOMING DATA 12/03/09

  • 8:30 AM- US WEEK JOB CLAIMS (485 K), PRODUCTIVITY (8.6%), UNIT LABOR COSTS (-4.2%)
  • 10:00 AM ISM NON MFG INDX (52.0)
  • 10:30 AM EIA NAT GAS REPORT
  • 11:00 AM US three-, 10-, 30-YEAR TREASURY ANNOUNCEMENTS

DATA RESULTS 12/02/09

  • ADP EMPLOYMENT REPORT (-169 K)
  • EIA INVENTORY REPORT (CL +2.1 M, RBOB +4.0 M, DISTIL -1.2 M, CAPCITY UTIL 79.7)
  • BEIGE BOOK

U.S. DEBT REVIEW AND OUTLOOK

U.S. TREASURIES posted a choppy session on Wednesday, with most of the Treasury Debt complex closing near session lows, following a technical pattern of testing support and resistance ranges. Treasuries remained quiet for most of the session, with traders again hesitant to place large bets ahead of announcements of next week’s three-, 10- and 30-year auctions and Friday’s employment data.

Reaction to data releases today caused some manageable volatility. The ADP employment report for November showed a continued pattern of lessening job losses (loss of 169 K was the lowest monthly drop of jobs since July of 2008) Treasuries initially retreated on this news, then recovered as sentiment focused on the fact that job losses are still occurring. A bearish inventory report on the energy complex accelerated the drop in equity prices, prompting some short covering in Treasuries ahead of the afternoon Beige Book reading. The report from the FOMC offered little in the way of surprise. The review cited “modest” recovery across most elements of the economy.

Digestion of the Beige Book report was swift and returned focus to the potentially improving employment picture, which prompted renewed selling of the Treasury complex ahead of the next week’s auction supply announcements and “last piece of the puzzle” for those bullish on the recovery-improved employment data. Treasuries could maintain the pattern of “sell the rumor, buy the fact” with regards to employment data, once all the bad news is digested, ranges will be tested, but likely not broken for the near term, as end of the year bullish support likely to carry into the next 2 weeks at least.

Technically, March 30 year futures traded within predicted range from Tuesday, closing near support at 121-07. The contract should likely trade in a tight range on Thursday, Support for the market forms at 120-29, with 120-18 a likely downside target for the week. Resistance sets up at 122-24.

US EQUITY REVIEW AND OUTLOOK

US EQUITIES traded in a tight range today, with the major indices ending the session mixed. The market weighed the significance of Wednesday’s ADP employment reading for the private sector. The report showed a loss of 169,000 jobs, worse than the expected reading of 150,000. The market appeared to take the data in stride though, as the figure supported the continuing trend of lower job losses. In fact, the reading was the lowest since July of 2008.

The mixed picture of the market was defined by a lack of direction regarding investor sentiment. Weakness was led by the energy sector, which retreated after a post Thanksgiving inventory report on oil demand came in highly bearish. Financials also dragged down investor sentiment, as a level of uncertainty remains in the wake of additional repercussions from the Dubai World debt restructuring. Financials may be in the spotlight on Thursday, after Bank of America announced that it would be paying back $45 billion of TARP funds (Expect possible restructuring and plans to divest businesses as possible conditions of being allowed to back out the government as a partner).

Technically, December S&P futures remain within current support and resistance outlooks. Resistance at 1113.00 was pierced briefly, but managed to hold. Market remains poised to try and test 1118.00, with 1122.50 as next level of significant resistance. The downside of the recent range sets up at 1103.00, with 1098.00 at 1089.00 setting up as targets to the downside.

US DEBT FUTURES

OPEN

HIGH

LOW

CLOSE

CHANGE

US H0 (US 30 YRS)

121-18

122-03

121-07

121-07

-13/32nds

SP Z9 (S&P 500)

1107.50

1115.00

1104.50

1107.90

-.50

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.

Comments
comments powered by Disqus
Check out Futures Magazine - Polls on LockerDome on LockerDome