Bond and equity report for March 24

SUMMARY OF UPCOMING DATA 03/24/10

  • 8:30 AM US DURABLE GOODS ORDERS (1.0%)
  • 10:00 AM US NEW HOMES SALES (315 K)
  • 10:30 AM EIA INVENTORY (CRUDE, PRODUCTS, CAP UTIL)
  • 1:00 PM US 5 YEAR NOTE AUCTION ($42B)

DATA RESULTS 03/23/10

  • U.S. EXISTING HOME SALES (5.02M/5.00 M)
  • FHFA HOUSE PRICE INDEX (-0.6%)
  • U.S. TWO-YEAR NOTE AUCTION ($44B, B/C 3.00, YIELD AWARDED 1.00%)

U.S. DEBT REVIEW AND OUTLOOK

TREASURIES FUTURES YIELD CURVE STEEPENS AS U.S. SHORT-TERM CONTINUES TO GAIN MILD SUPPORT FROM EUROZONE UNCERTAINTY.

GAINS PARED AFTER ANEMIC U.S. TWO-YEAR NOTE AUCTION

U.S. Treasuries continue to trade in tight ranges as traders and investors search for a catalyst to fuel some form of a breakout. The short end of the U.S. yield curve continues to benefit from the uncertainty surrounding the euro zones sovereign debt. The latest development has France and Germany dropping the problem in the lap of the IMF (International Monetary Fund) The negotiations, posturing and apparent indecision (planned or not) appears to be shaping the potential outcome of the Greek fiscal crisis into a bell curve-with the supposedly illegal exit of Greece from the euro zone on one end and the restructuring of debt payments without a domino effect from other countries on the other. In the middle sits the bailout of one country with additional countries planning their own pleas for help.

Gains in Treasuries were pared after the first of three US Treasury auctions this week. The magic number of $100 billion is coming to test bidder acceptance again. Demand for the $44 billion of 2 year notes was neutral to anemic with a bid to cover of 3.00 and awarded yield of 1.00%; the same level as the coupon rate. The demand was the lowest since December 2009, with indirect bidders-the category which includes foreign central banks- buying 34% of the debt. Additional selling pressure hit Treasuries after a reading on existing home sales was slightly better than expected.

Technically, June Treasuries appear to be forming a slightly higher triple top, but the upside potential appears to be waning. Significant resistance looks to set up at 118-08. If this level holds, the contract should turn down to test 117-08 and 116-31.

U.S. EQUITIES REVIEW AND OUTLOOK

U.S. EQUITIES CONTINUE HIGHER ON LIGHT VOLUME, TECHNICAL RESISTANCE BROKEN

VIX (FEAR INDEX) FALLS TO THREE YEAR LOW.

IPO MARKET SHOWS NEW SIGNS OF LIFE, TAKING SOME FOCUS FROM CORPORATE DEBT MARKETS.

US Equities continue to chug higher, with technology and industrial stocks continuing to lead the major indices higher as fear appears to not be a factor. Stocks began the session strong, taking a "glass half full" attitude toward the reading on US existing home sales. The data came in line with expectations. Even though the reading showed a third monthly decline in sales and home prices, participants took the lack of surprise as a positive.

The broad based rally was led primarily by industrials and technology stocks. The focus on economic recovery and stability was given an additional boost today as the VIX or "fear index" hit a three year low today. The ongoing lack of volatility continues to feed into the light volume asset manager driven rise across stocks. As the pendulum appears to be swinging back from a traders to an investors market (investors, buy and hold-remember those concepts) participants needs to keep in mind the need for professional money to be put to work before the end of the 1st quarter. The lack of heavy volume and volatility could lull one into a false sense of security as the stimulus gas pedal continues to be pinned to the floor.

Technically, June S&P futures are setting up to challenge resistance levels at 1173.00 and 1180.00. If these levels hold, the contract may stage a pullback to 1154.50

US DEBT FUTURES

OPEN

HIGH

LOW

CLOSE

CHANGE

US M0 (US 30 YRS)

117-30

118-05

117-19

117-22

-9/32nds

SP M0 (S&P 500)

1162.50

1170.50

1159.20

1163.60

+7.60

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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