Makin’ It Four For Four
T-bonds
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initial jobless claims jumped unexpectedly to their highest level in five years.
Higher unemployment implies that the Fed will have to remain on the offensive to
revive the economy and keep joblessness under control. With an inverse
relationship to price, bonds rallied in anticipation of lower interest rates.
Economic data has been mixed, however. GDP last quarter
came in nearly twice as strong as expected at 2%, implying the Fed’s four
interest rate cuts totaling 2% have been successful in warding off recession.
The focus is now on the the Fed’s FOMC meeting on May 15 and the market is
beginning to price in an aggressive cut. T-bonds are up 27/32 at 102 12/32.
The June Federal Fund futures
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near contract highs, pricing in about a 50-50 chance of a 50-basis-point cut
at the Fed’s monetary policy making meeting (a .25% move is assured, according
to the this highly accurate measure).Â
Five down signals on the Market
Bias Indicators Page suggested stock index futures could decline from
yesterday’s intraday double top formation. Both the Spooz
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Nasdaq futures
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yesterday, a pattern pointed out in last night’s Futures Market Recap. The
Nasdaq futures found bottoming tail bar in the 1860 area before settling 88.50
lower at 1885.50.
S&P futures
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Energy contracts rebounded after yesterday’s steep selloff on bullish API weekly inventory statistics. Unleaded gasoline
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showed that it could continue its momentum ride, closing at a new all-time
contract record in an outside day, a very constructive development. In
yesterday’s API, gasoline did rise by 300,000 barrels last week but that gain
followed a hefty two-million-barrel draw down the week before. With fragmented,
“cleaner burning” (reformulated) gasoline standards, shortages in
regulated cities could emerge causing spikes in the futures. Unleaded stair-stepped
up, pulled back to test support at 1.0600 before closing .0410 higher at 1.0711.
The leading contract on the Momentum-5
List, July sugar
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and made good on an
Off The Blocks
entry. The yearly high in the 9.40 area will be closely eyed by
profit-takers. Sugar ended .23 higher at 9.20.