Bond & Equity Report for May 11

DATA RELEASES 05/12/10

  • 8:30 am US International Trade
  • 10:30 am EIA Inventory Report
  • 1:00 pm US 10 yr note auction

DATA RESULTS 05/11/10

  • 10:00 am US Wholesale Trade
  • 1:00 pm US 3 yr note auction

US DEBT REVIEW AND OUTLOOK
US Treasuries came under selling pressure on Monday after the weekend decision by the chief euro zone financial institutions to inject nearly a trillion dollars worth of stimulus and liquidity into the troubled sovereign debt sector. The move by the ECB and IMF gave the markets a boost of confidence that these financial bodies would enact active liquidity strategies rather than play to the traditional European role of keeping a conservative strategy that worries primarily about the inflation picture. Low yielding debt from the US, Germany, and Japan came under pressure as risk tolerance returned to the table in a gargantuan manner. Some support came in for the treasury sector as market participants began initial debate about the details and potential challenges to the European bailout/stimulus plan. Markets will be watching the results of Tuesday’s 3 year auction results to determine the participation rate of indirect bidders (the category that includes foreign central banks). Some insight may attempt to be pulled from auction results with regards to the role that US Treasuries may played in developing the financial portfolio for an attempt of European economic restructuring.

TECHNICALLY SPEAKING- Technically, the June 30 US bond contract has retraced the security bid from Thursday’s equity drop. Support at 120-10 was broken inter day and sets up as an initial support level. A key support level sets up in the contract at 119-16, with 118-00 an initial downside target. Resistance levels for the contract set up at 121-17 and 121-29.

US EQUITIES REVIEW AND OUTLOOK
The major stock indices staged their largest one day gain in nearly a year as the markets experienced a wave of risk tolerance returning to the trading region. Technologies, financials, and energy stocks, the sectors that were hammered in last week’s frenzy of uncertainty regarding the viability of global sovereign debt, led the markets to a near record advance decline ratio (guess which side won that tug of war today!)

The major stock indices traded off of their best levels hit during the late European session for most of the day. Market participants tried to digest details, limitations, and potential challenges to the unprecedented fiscal support and stimulus plan proposed by the euro zone financial institutions. By the end of the US session, a small technical upswing lifted the markets to close near the best levels of the day.

TECHNICALLY SPEAKING- Support for the June S&P contract sets up at 1143.10 at 1134.50 while resistance sets up at 1173.20 and 1180.50

US DEBT FUTURES OPEN HIGH LOW CLOSE CHANGE
US M0 (US 30 YRS) 121-14 121-17 120-05 120-27 -1 05/32nds
SP M0 (S&P 500) 1153.00 1161.60 1144.50 1156.60 +49.60

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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