Bond and equity report for Mar. 16

SUMMARY OF UPCOMING DATA 03/16/10

  • 8:30 AM US HOUSING STARTS (565 K)
  • 2:15 PM FOMC COMMITTEE MEETING ANNOUCEMENT

DATA RESULTS 03/15/10

  • EMPIRE STATE MFG SURVEY (22.86/22.0)
  • U.S. INDUSTRIAL PRODUCTION (0.1%/0.0), CAP UTIL RATE (72.7/72.4)
  • HOUSING MKT INDEX (15/17 PREV)

U.S. DEBT REVIEW AND OUTLOOK

U.S. Treasuries traded in a quiet range on Monday. The U.S. debt complex came under early pressure as global sovereign debt came under the ratings microscope. Moody’s debt rating service reaffirmed the AAA rating on UK and U.S. debt but warned that the enormous deficits on the countries balance sheets could result in a future downgrade. Weakness in the European debt markets ahead of meetings designed to tackle Greece’s fiscal problems also spilled over into the U.S. Treasuries.

The markets staged a late session recovery, gaining support as capital moved into the short end of the yield curve, eventually pulling up the rest of the debt complex with it. Focus appeared to shift to the FOMC meeting tomorrow; fueling some short covering as traders took into account the likelihood that interest rate policy will remain at or near the current zero rate interest policy.

Technically, June 30-year Treasuries appear to be setting up to put in a series of lower highs, as the market seems to have put in a double top formation at the beginning of February and March. Initial break on the downside sets up at 116-14, with 116-08 setting up as an initial support level. Resistance for the contract sets up at 117-16 and 117-20.

U.S. EQUITY REVIEW AND OUTLOOK

Stocks traded mostly lower to start the week. However the major indexes closed near their best levels of the day. The recovery was led by a rebound in financials, which came under early pressure as the sector struggled with uncertain interpretations of a proposal for financial reform by Senator Christopher Dodd (D. Conn.). The proposal was not as watered down as many participants had hoped with regards to the levels of risk major financial institutions (too big to fail) would be allowed to participate in. The sector rebounded to slightly positive as the markets digested the initial salvo.

Tech stocks were mostly lower throughout the session on concerns that Cisco may pull its browsing services out of the China market due to censorship issues, while commodity & energy stocks came under pressure as the U.S. dollar rebounded, weakening the underlying pressures. Consumer staple stocks were among the best performers as Citigroup analysts upgraded a number of key stocks in the sector, including Wal-Mart.

Overall, stocks ranged traded with light volume ahead of the FOMC meeting results to be announced.

Technically, June S&P futures remain in overbought territory. Market should have another downside test to support at 1135.50. A break of this level should set up for a run to 1128.75. Resistance sets up at 1150.00, with a break of this level setting up a test of 1153.00 and 1157.50.

US DEBT FUTURES

OPEN

HIGH

LOW

CLOSE

CHANGE

US M0 (US 30 YRS)

117-02

117-04

116-16

116-29

-1/32NDS

SP H0 (S&P 500)

1143.00

1146.30

1136.80

1145.70

-0.90

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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