Bond & equity report for March 17

SUMMARY OF UPCOMING DATA 03/17/10

· 8:30 AM US PRODUCER PRICE INDEX (-0.2%, EX # 0.1)

· 10:30 AM EIA INVENTORY (CRUDE, PRODUCTS, CAP UTIL)

DATA RESULTS 03/16/10

· US HOUSING STARTS (572 K/565 K)

· FOMC COMMITTEE MEETING ANNOUCEMENT: NO CHANGE IN INTEREST RATE POLICY. FOMC TO KEEP TARGET OF CLOSING MORTGAGE SECURITIES PURCHASE PROGRAM AT END OF MARCH.

U.S. DEBT REVIEW AND OUTLOOK

· TREASURIES RISE AS FOMC KEEPS ACCOMMODATIVE INTEREST RATE POLICY.

· ADDITIONAL SUPPORT FROM LOWER HOUSING STARTS, LACK OF NEW DOWNGRADES OF SOVEREIGN DEBT.

U.S. Treasuries rallied posting their highest session gains of the month after the FOMC (Federal Open Market Committee) kept the accommodative U.S. interest rate policy in place. The lack of a rate change did not offer much surprise, while the sheer “boredom “of the post meeting statement allowed both US debt & equities to close near session highs.

Treasuries found early support from a global sigh of relief regarding sovereign debt in general. S&P rating service chose to hold off on downgrading Greece’s sovereign debt. The cautious confidence in the euro zone’s strategies to deal with Greece’s fiscal crisis offered some stability to the outlook for global interest rate policies, offering support to US and European debt. A report showing US housing starts dropped on a month to month comparison and a lack of a catalyst regarding supply concerns (no major Treasury auctions this week) also helped to support US Treasuries for the session. The market failed to break out of its recent trading range and may be vulnerable to selling into strength as the overall outlook for the Treasury complex remains uncertain ahead of the Federal Reserve’s plan to cut back on purchases of US debt securities.

Technically, June 30-year futures appear to be forming a triple top on the daily chart. A hold at this level may be forming a lower high scenario, which may prompt some selling into recent strength. Expectations are for a pullback to 116-22, with 116-09 setting up as a near term support. Initial contract resistance sets up at 117-29, with a key resistance level at 118-06.

U.S. EQUITY REVIEW AND OUTLOOK

· Equities rally to best levels since 2008 after FOMC offers no surprises to interest rate policies.

· Several key large cap stocks hit 52 week highs on announced dividend increases

· Technically, equity markets look overbought, may be setting up for pullback.

Stocks rallied to their best levels since October 2008 after the FOMC decided to leave interest rate policies unchanged. Comments after the meeting suggested that the committee’s is developing a cautiously optimistic view on the labor market. The action was the final play of a hat trick which helped support investor confidence and risk tolerance. Economic data on housing starts and import prices came in better than most analyst estimates while stability in the global sovereign debt market created a foundation which allowed the major indices to defy the overbought technical indicators for another session.

Equities underwent a broad based rally, led by bellwether General Electric. The company hit a 52-week high today after the CEO announced plans to increase dividend payments. Considering the ongoing low interest rate environment, this latest announcement of dividend increases from a major corporation was another victim of good timing. Intel shares led the tech sector higher after the chip maker launched its new Xeon serve chip. The chip is supposed to offer power savings of nearly 30% compared to previous models.

Watch for renewed concerns of China’s interest rate policy. This may be a catalyst to fuel the needed pullback.

Technically, June S&P futures are trading in significantly overbought territory. Daily RSI measure is coming in near the 90 level (70 to 80 is considered the normal overbought range). Based on this indication, expecting the market to pull back to initial level of 1148.00; a break of this level could set up a move to 1142.00. Resistance sets up at 1158.00.

US DEBT FUTURES

OPEN

HIGH

LOW

CLOSE

CHANGE

US M0 (US 30 YRS)

117-01

117-24

116-26

117-21

+24/32nds

SP M0 (S&P 500)

1148.50

1155.70

1145.70

1154.80

+9.10

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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