Bond & equity report for Feb. 23

SUMMARY OF UPCOMING DATA 02/23/10

· 10:00 AM US CONSUMER CONFIDENCE (55.0)

· 1:00 PM US 2 YEAR NOTE AUCTION ($44B)

DATA RESULTS 02/22/10

· US 30-YEAR TIPS AUCTION ($8B. B/C 2.45, YIELD AWARDED 2.27%

U.S. DEBT REVIEW AND OUTLOOK

U.S. Treasuries traded with a slightly negative bias on Monday as speculation that the Federal Reserve is likely to maintain a low interest rate environment boosted risk tolerance and created value seeking in equities. Less than spectacular auction results from the 30-year TIPS (Treasury Inflation Protection Securities) also prompted traders to focus on the record levels of supply in the marketplace. Corporate debt provided a value play as buyers sought attractive entry points from recent pullbacks amid concerns regarding deficit issues among euro zone and U.S. sovereign debt.

Treasuries and equity markets are both likely to remain subdued ahead of Federal Reserve Chairman Bernanke’s two-day testimony this week. Debt and equity traders will be looking for a possible timeframe for changes in U.S. interest rate polices, as well as clues into the mindset of policy makers belief in the sustainability of the economic recovery, particularly if there sectors that can grow unaided and those that will need long term life support.

Technically, March 30-year Treasury futures appear to be setting up for a possible short covering rally that could lead the market high initially to test upside at 116-28, with a break of this resistance setting up for a target of 117-12. Support for the contract sets up at 116-05, with a break of this level setting up for a possible test of 115-22.

U.S. EQUITY REVIEW AND OUTLOOK

S&P Futures traded mixed through the session, with traders modifying recent strategies, taking profit in energy and material stocks and putting the funds to work seeking value in the financial sector, which has been under pressure recently. Expectations of increased M&A activity supported also brightened trader and investor sentiment on the financial sector. By the end of the session though, gains reversed as financials failed to post challenges to technical resistance levels. Energy stocks posted losses after the glow of a major merger between oil services companies faded and profit taking took hold. Early gains from better than expected earnings reports from consumer and home improvement companies faded under guidance that the U.S. consumer remains under financial pressure and recovery is likely to remain slow and potentially vulnerable.

Expectations are for the markets to trade in a relatively narrow range ahead of the two day testimony of Federal Reserve Chairman Bernanke. Markets will be looking for clues regarding future unfolding of the Fed’s “exit strategy” as it pertains to the sustainability of economic recovery.

Technically, March S&P futures traded in a relatively tight range on Monday, Initial support for the contract sets up at 1103.50, with a break of this level setting up for a test of 1098.00. Market shows strong midterm support at 1089.60 and 1082.10. Resistance for the contract sets up at 113.75 and 118.50 with a break of these levels setting up a possible test of 122.20.

US DEBT FUTURES

OPEN

HIGH

LOW

CLOSE

CHANGE

US H0 (US 30 YRS)

116-25

116-26

116-07

116-12

-13/32nds

SP H0 (S&P 500)

1110.50

1111.00

1103.60

1107.50

+1.30

Prepared by Rich Roscelli & Paul Brittain. PLEASE VOICE YOUR MARKET OPINIONS, THOUGHTS, AND QUESTIONS. EMAIL TO RICH@BINVSTGRP.COM Additional Information can be found at WWW.WHITEHALLVEGAS.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. Whitehall Investment Management, 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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