Bond & Equity Outlook for May 6

DATA RELEASES 05/06/10

  • 8:30 am US Jobless Claims (445 K)
  • 8:30 am Nonfarm productivity (2.6%)
  • Unit labor costs (-1.0%)
  • 10:30 am EIA Nat Gas Inventory

DATA RESULTS 05/05/10

  • ADP Employment Report (+32,000)
  • ISM Non Man Index-(55.4/56.4
  • EIA Petroleum Report (CL +2.8M, RBOB +1.6M, HO +0.6M)

US DEBT REVIEW AND OUTLOOK
US Treasuries continued to trade with a security bid as the ongoing concerns regarding a euro zone credit contagion and further rallying in the value of the US Dollar prompted further buying in the long end of the yield curve. A midsession rally in stocks driven by a quelling of concerns and buyers seeking some value in beaten down sectors pulled Treasuries back to close below technical resistance levels.

The Treasury announced a total of $88 billion worth of new debt coming to market next week (US 3 yrs, 10 yrs, 30 yrs). This may have prompted some pullback from technically oversold conditions as traders shift focus to the reception of this new debt, particularly from indirect bidders (the sector that includes foreign central banks).

TECHNICALLY SPEAKING, The close below resistance at 120-22 suggests that the recent up move in Treasuries may be getting ready to take a break. Resistance looks to be forming at the 120-28 level. If this level holds the market may concede in the near term and pullback to fill in gap at 119-28 and 119-16 support level.

US EQUITIES REVIEW AND OUTLOOK
Stocks continued to fall in a volatile session that saw some value seekers coming in to buy off key support ranges in the S&P and Dow futures. Energies and material stocks continue to remain under the most pressure as the US dollar continued its rally to its best levels in over a year. Energies in particular were under pressure as a bearish inventory report, fund liquidation, and a technical sell bias pushed crude prices below $80. Data showing employment gains in the private sector and continued growth in the US service industry went largely unnoticed.

TECHNICALLY SPEAKING, The rebound off the target support range of 1158.80 could result in some additional upside consolidation as volatility may subside over the next several sessions. Upside resistance sets up at 1173.50 with a break of this level targeting a test of 1178.10 on the June E mini S&P, while 1148.50 sets up as a downside target should the contract return to challenge 1154.50.

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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