Bond & Equity Report for May 13

DATA RELEASES 05/13/10

  • 8:30 am US Weekly Jobless Claims (440 K)
  • 8:30 am US Import/Export Prices
  • 10:30 am EIA Inventory (Nat Gas)
  • 1:00 Pm US 30 year Bond Auction

DATA RESULTS 05/12/10

  • US International Trade (-$40.4B)
  • EIA Inventory Report CL 1.9M, RBOB -2.8M, DISTIL 1.4M, Cap Util 88.4
  • US 10 yr note auction $24 B B/C 2.96 Yield Award 3.548%

US DEBT REVIEW AND OUTLOOK
US Treasuries fell on Wednesday as euro zone fiscal concerns ebbed. The security bid in Treasuries eased after reports that Spain and the UK, which just welcomed its new government, would be implementing deficit reduction plans that appear willing to focus on necessity rather than popularity. The notion of budget cuts and enacting of plans that will not at the very least make the debt crisis any worse (at least for the time being) boosted global risk acceptance and renewed some of the shaken confidence in the global economic recovery. US 30 year futures fell back to retest support of the range set from Thursday’s market panic/steroid seesaw of volatility.

Wednesday’s Treasury auction of $24 billion worth of US 10 year notes was relatively well received. Bid to cover was strong at 2.96, though this came at the cost of a slightly higher yield. Treasuries increased their downward slide after the auction results were reported.

TECHNICALLY SPEAKING- Significant support continues to set up at 119-16, with a break and close below this level setting up a possible retracement to 118-23. Resistance sets up at 121-10.

US EQUITIES REVIEW AND OUTLOOK
Stocks rallied on Wednesday to close above the breakdown level from last Thursday’s market meltdown. Gains in the markets were led by a boost of confidence that the debt crisis in Europe shows signs of being contained. Spain and the United Kingdom announced that they would be implementing significant deficit reduction strategies. This action, coupled with data releases showing that Europe’s economy actually grew more than expected staged the springboard for a turnaround from downside pressure on equities during the early Asian session. The active implementation of presumably unpopular but necessary austerity plans for the European region offered hope for market participants that more than just printed money will be utilized to combat the euro zone debt crisis. How much of these plans will actually make it to a long term revamping of Europe’s competitiveness will remain in question for some time to come.

Technology and growth stocks were among the best performing stocks in Wednesday’s session. Gains in Apple and IBM led a broad based rally. IBM shares moved higher after a report issued from the company calling for their EPS (earnings per share) to double by 2015. The overall positive sentiment overcame pressure on the financial sector after news broke that Morgan Stanley will be investigated regarding trading in mortgage backed derivatives.

TECHNICALLY SPEAKING- Significant support for the June S&P contract remains in place 1143.00. A retracement of today move should find initial support at 1157.80 Today’s upward momentum needs to break & close above 1173.00 in order to expect sustainable upside. Upside resistance should the market breakout sets up at 1178.50 and 1186.25.

US DEBT FUTURES OPEN HIGH LOW CLOSE CHANGE
US M0 (US 30 YRS) 120-27 121-07 120-03 120-10 -15/32nds
SP M0 (S&P 500) 1158.20 1171.00 1156.30 1169.70 +17.50

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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