Bond & equity report for March 18

SUMMARY OF UPCOMING DATA 03/18/10

· 8:30 AM US CPI (0.1%, EX # 0.1%)

· 8:30 AM US JOBLESS CLAIMS (455 K)

· 10:00 AM US LEADING INDICATORS (0.2%)

· 10:00 AM PHILLY FED (18.0)

· 10:30 AM EIA NAT GAS RPT

· 11:00 AM U.S. TWO-, FIVE- and SEVEN-YEAR NOTE ANNOUCEMENT.

DATA RESULTS 03/17/10

· U.S. PRODUCER PRICE INDEX (-0.6/-0.2%, EX # 0.2%/0.1%)

· EIA INVENTORY (CRUDE 1.1M, RBOB -1.7M, CAP UTIL 80.6)

U.S. DEBT REVIEW AND OUTLOOK

· TREASURIES TRADE IN NARROW RANGE, 30-YEARS HIT RESISTANCE ON BENIGN WHOLESALE INFLATION DATA

· SPREAD BETWEEN SHORT AND LONG END OF YIELD CURVE NARROWS SUPPORT FROM INTEREST RATE OUTLOOK.

U.S. Treasuries traded to the upside, maintaining some follow through momentum from Wednesday’s FOMC meeting which confirmed the Federal Reserve’s commitment to maintaining current interest rate policy. The long end of the yield curve posted the best gains today. The bellwether measure of the spread between the two- and 10-year notes narrowed to its lowest levels in nearly two weeks. The long end of the curve received a short in the arm from a lower than expected reading on wholesale prices. With the apparent worries of global deflation rather than inflation weighing in the corner of “Murphy’s Market Law” holders of debt sold out of the short end of the yield curve and were encouraged by recent developments to commit capital to the U.S. 10 and 30 years. Resistance held ahead of Thursday’s US Treasury auction announcements.

Technically, June 30-year Treasuries pulled back from resistance at 118-04. Market appears to be forming a triple top. Expectations are for a pullback to 117-14, with 117-02 setting up as a significant support level. Market does have upside potential to test 118-23, where a shorting opportunity is likely to form.

U.S. EQUITY REVIEW AND OUTLOOK

Equities continue higher on follow through from FOMC rate decision, risk tolerance increase. Benign inflation data helps equities to hold in overbought territory, late session pullback at resistance.

U.S. stocks maintained upside momentum, extending gains from the overnight while building on the foundation set from dovish inflation data on the U.S. wholesale level. U.S. producer prices fell more than expected on an early February pullback in gasoline prices. The core number, which excludes food and energy prices rose in line with expectations. Tame inflation data worked to support the Fed’s decision to keep interest rates at current historic lows for an “extended” period (timing is key as we all know.)

The combination of these elements allowed the major indices to post some of their best advance/decline ratios in nearly five years. The momentum also allowed stocks to maintain strength while in traditionally technical overbought territory. A late session pullback after being unable to break through another key level of resistance does suggest that some of this upward momentum is the result of quadruple witching, with the markets attempting to ensure certain strike levels will be in play at expiration.

Technically, June S&P futures remain in overbought territory and should seek to stage a pullback by Monday or Tuesday of next week. Expect the contract to stage a pullback in short term to 1147.90. Upside resistance looks to form at 1178.00.

US DEBT FUTURES

OPEN

HIGH

LOW

CLOSE

CHANGE

US M0 (US 30 YRS)

117-22

118-05

117-16

117-29

+8/32nds

SP M0 (S&P 500)

1158.00

1165.00

1157.70

1161.00

+6.20

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.

Comments
comments powered by Disqus
Check out Futures Magazine - Polls on LockerDome on LockerDome