Bond & equity report for April 8

DATA RELEASES 04/08/10

  • 8:30 AM US JOBLESS CLAIMS (436K)
  • 10:30 AM EIA NAT GAS REPORT
  • 1:00 PM US 30 YEAR BOND AUCTION

DATA RESULTS 04/06/10

  • EIA INVENTORY REPORT (CRUDE +2.0M, RBOB -3.0M, DISTIL +1.1M)
  • US 10 YEAR NOTE AUCTION ($21 B-B/C 3.72, YIELD AWARDED 3.900%)

U.S. DEBT REVIEW AND OUTLOOK

U.S. Treasuries rebounded for a second session, filling in the gap from last week’s drop as the complex appears to be working toward setting up a new trading based on the longer-term downside speculation.

The longer end of the yield curve undertook the biggest upside gains today, taking its cues from continued uncertainty regarding the Euro Zone's response (or lack thereof) to the Greek fiscal bailout (devil is always in the details). The dynamic catalyst of the session was the robust 10-year T-note auction.

Apparently, the prospect of a continuing low U.S. interest rate environment and yields on the benchmark knocking on the 4.00% level was enticing enough for bidders to pad the foundations of their portfolios.

Technically, June 30-year Treasuries broke through resistance at 115-08, covering most of the gap left from last week’s drop. Expecting the market to pullback to test 115-07, this could create a narrow pennant formation. If this level holds, the market could test back up to 116-03. A break of that level should allow for a pullback to 114-26.

U.S. EQUITIES REVIEW AND OUTLOOK

Stocks retreated on Wednesday, as risk tolerance subsided on increasing uncertainty regarding the resolution of the Greek crisis and a lack of fresh data to support the market rallying above its recent highs.

Early pressure on stocks came from the euro zone as data on the service sector in the United Kingdom came in lower than expected and a report from the OECD forecast that Germany-the benchmark economy of the euro zone-could be susceptible to a double dip in its economy as demand from the restocking of depleted inventories fades and replacement prospects for growth and revenue generation appear uncertain.

This reminder of one aspect of the recovery that has a finite life span seems to have prompted market participants to take some capital off the table, particularly as the 1st quarter earnings season draws near.

Commentary from the Fed Chairman also weighed on investor sentiment. The gains prompted by the FOMC committee comments became vulnerable as the chairman focused on the continuing challenges to recovery and warned against the impact of budget imbalances (yes-someone may actually need to pay for this stuff one day.)

Technically, June S&P futures retraced back to an initial support range of 1173.00. The rebound off this level offers no clear direction of a breakout. The market looks to be setting up to trade within its recent range with 1186.50 and 1192.50 setting up as resistance points. Support sets up at 1171.00 and 1167.50.

US DEBT FUTURES

OPEN

HIGH

LOW

CLOSE

CHANGE

US M0 (US 30 YRS)

114-18

115-27

114-11

115-22

+1 10/32nds

SP M0 (S&P 500)

1183.00

1186.00

1173.50

1179.00

+6.80

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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