Bond and equity report for Mar. 2

SUMMARY OF UPCOMING DATA 03/02/10

  • NO MAJOR ECONOMIC RELEASES

DATA RESULTS 03/01/10

  • PERSONAL INCOME AND SPENDING (0.1%/0.4%)
  • CONSUMER SPENDING (0.5%/0.4%)
  • ISM MFG INDEX (56.5/57.5)
  • CONSTRUCT SPENDING (-0.6%/-0.8%)

U.S. DEBT REVIEW AND OUTLOOK

U.S. Treasuries traded with a slightly negative bias on Monday, taking cues from reports showing steady growth in US consumer spending and manufacturing. Equities provided a more attractive focus for trading capital today as M& A activity gave the markets a confidence boost suggesting business was "getting back to normal" in some sense. Reports that corporate debt offered their best overall return in six months as settlement of Europe’s fiscal problem appears likely also drew capital away from U.S. government securities. Continued focus on the potential sovereign debt defaults around the world (See the CNBC.com focus-I checked, the US is not listed.) continues to place pressure on Treasuries as the balance sheet deficit continues to grow.

Overall, the Treasury complex is likely to remain quiet ahead of the U.S. jobs report on Friday. A pullback in commodities did offer some stability to the complex, keeping the losses under control, particularly in the U.S. 10-year benchmark.

If there were to be an element of concern on the horizon for the U.S. debt complex, it might be best represented by the political drama playing out in the UK. Sterling stages its largest one day drop in nearly a year on concern that the upcoming parliamentary elections will result in a lame duck representative body unable to contend with its fiscal difficulties. A reminder, U.S. elections are coming up in November. Could a similar result shake the already tenuous confidence that exists in the ability of the government to manage fiscal policy for long term revenue growth, thus weakening the debt complex in the U.S. even more? This is just a little something else to ponder ladies and gentlemen.

June 30-year Treasuries have become the lead contract. The market may be forming a head & shoulders pattern that could find resistance at 117-30. A pickup in downside momentum should lead the market back down to the 116-23 price range.

U.S. EQUITY REVIEW AND OUTLOOK

S&P Futures began the trading month of March on a strong note, as steady growth in U.S. consumer spending and manufacturing, perceived resolutions to the Eurozone debt crisis, and continued increases in large scale M&A activity helped the major market indexes close at their best levels since late January.

Technologies were the best performing sector today as a number of analysts offered upgrade ratings and a number of bellwether firms posted better than expected revenues. Financials received a boost after AIG announced it was selling its Asian insurance operations to Prudential for $35 billion in cash and shares. The notion that the private sector may be taking the government bailout ball and running with it appears to be buffering risk tolerance and supporting some upside for equities. Gains may test cautiously higher on expectations that the employment picture may be stabilizing. Markets will have a clearer indication on Friday with the release of the U.S. nonfarm payroll data.

Technically, March S&P futures remain in a bullish trend for the near term. The move may find some difficultly moving above 1119.50 in the near term. Key resistance points above this level set up at 1121.75 and 1126.00. Support sets up at 1098.00

US DEBT FUTURES

OPEN

HIGH

LOW

CLOSE

CHANGE

US M0 (US 30 YRS)

117-11

117-22

117-04

117-15

-7/32NDS

SP H0 (S&P 500)

1107.20

1115.00

1107.20

1114.60

+11.20

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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