Bond & equity report for March 11

SUMMARY OF UPCOMING DATA 03/11/10

8:30 AM US INTERNATIONAL TRADE ($41B)

8:30 AM US WEEKLY JOBLESS CLAIMS (460 K)

10:30 AM EIA NAT GAS INVENTORY

1:00 PM US 30 YEAR BOND AUCTION

DATA RESULTS 03/10/10

US WHOLESALE TRADE (-0.2)

EIA INVENTORY FIGURES (CRUDE 1.4M, RBOB -2.9M, HEAT-2.2M CAP 80.7%)

US 10 YEAR NOTE AUCTION (BID TO COVER 3.45, YIELD 3.735

US TREASURY BUDGET (-222 M)

US DEBT REVIEW AND OUTLOOK

TREASURIES QUIET, LACK OF INTEREST AS RISK TOLERENCE INCREASES

US DEBT COMPLEX LIFTED OFF LOWS BY STRONG US 10 YEAR NOTE AUCTION

TREASURIES CONTENDING WITH APPEAL OF CORPORATE DEBT AS WELL AS EQUITIES

US TREASURIES traded lower on Wednesday, as the ongoing rebound of global risk tolerance continues to support interest in equities and corporate debt. Bonds hit their lows of the session after the major equities indices tested resistance levels on a surprisingly bullish read on US whole sale trade and enthusiasm regarding Citigroup’s plans to offer a new issue of preferred stock.

The complex was able to rally back to near unchanged after a surprisingly robust US 10 year note auction. Bid to Cover was surprisingly high at 3.45 (average B/C is 2.80) and the yield was significantly lower than expected. Demand for debt was not limited to Treasuries though, as several large issues of corporate debt were also well received by debt buyers. (Remember that capital is looking for places to find yield, most corporate balance sheets are supported by real cash, not the printed variety that sovereign debt appears to be so fond of.)

Technically, June 30 year bonds tested support today at 115-27 before rebounding above 116-10. Market appears to have some remaining upside momentum that should offer a test of resistance at 116-22. The trend to the downside should resume after the rebound, with the contract moving to test 115-04.

US EQUITY REVIEW AND OUTLOOK

Equities maintain positive tone, supported by data showing continued inventory draw downs.

Rally stalls as major indices pull back from resistance. China inflation concerns weigh on positive sentiment.

Equities managed to close higher in a seesaw market with the major indices closing near their highs after data on US wholesale inventory and growing enthusiasm for corporate helped to bolster optimism on the economy. The markets began the session on a very strong note, with S&P futures testing a significant resistance level at 1148.00. The failure to pierce these resistance levels may be a sign that the market is setting up for a pullback on profit taking as investors may be preparing sales of equities ahead of tax season (Uncle Sam-the markets best friend/worst enemy).

Another element reigning in gains today was concern about the inflation picture in China. The CPI readings in China came in higher than expected. Now the debate can begin. Will they or won’t they raise interest rates. The devil will be in the details regarding an interest rate hike in the hot China economy. This may offer the catalyst for a limited pullback that sets up a higher trading range as the markets digest a possible Chinese rate hike and determine the longer term benefits of a pro active fiscal policy.

June futures for the major indices (Dow, S&P, NASDAQ) will go lead on Thursday.

Technically, March S&P futures remain within support & resistance ranges. Key resistance levels remain at 1148.00 and 1152.00, while downside support continues to set up at 1128.00.

US DEBT FUTURES

OPEN

HIGH

LOW

CLOSE

CHANGE

US M0 (US 30 YRS)

116-14

116-17

115-27

116-10

-4/32nds

SP H0 (S&P 500)

1140.50

1147.90

1139.30

1145.70

+5.20

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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