Bonds Buckle On Good News
Debt futures plunged one day ahead of the Federal
Reserve’s announcement on monetary policy, following economic reports out today
that showed the economy may be healthier than many observers had believed.
Durable goods, new home sales, and consumer confidence all came in stronger than
expected, unwinding some of the economic pessimism that had led to the recent
rally in debt futures.
On the release of the consumer confidence numbers,
prices across the yield curve fell.
September T-bonds
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10-year notes
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Notably for tomorrow, the July Fed Funds futures
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tomorrow from a 56% chance earlier in the session.
And speaking of the Fed, today we had Tony Crescenzi, TradingMarkets bond
honcho on the new interactive format of TradersWire. Now I say this with the
greatest respect: Tony Crescenzi is one of the most informed bond, economic, and
Greenspan analysts on Wall Street. And his bond analysis is available daily on
the TradersWire (click the BondWire button) as well as in his regular articles
on the main TradingMarkets.com site. Tony Crescenzi will be coming on TradersWire live again
tomorrow both before and after the Fed announces its decision on interest rates.
One very interesting point Tony made today (see his
article) was in reference to the fact that the Fed usually cuts rates in increments of a 1/4 point. Tony
suggested today that the Fed may consider cutting rates in increments of 1/8s,
meaning that a 3/8 cut rather than the debated 1/2% or 1/4% cut widely expected could be in the cards tomorrow. And that is
approximately where the July Federal Funds futures contract — the best predictor of likely Fed moves —
closed at, at a level that predicts about a 3/8% cut in rates on the day before the
Fed’s important FOMC meeting.
Dow futures
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closed 35.00 lower at 10,515.0 in choppy trade.
Nasdaq 100 futures
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S&P futures
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Pullback From Lows
trigger. Carolyn Boroden’s intraday S&Ps and Nasdaq Price Action Levels
bracketed this market excellently today as well.
Dominating the Momentum-5
List, pigs remain on a tear. August pork bellies
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the island head from April.
August lean hogs
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at 69.400.
Wheat
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head-and-shoulders patterns. (The prior head-swing highs were on May 1 and June
1, down to 246). Basis July closed 2 1/2 higher at 248 1/4. Although every major
grain contract is on the Implosion-5 List or the
New 10-Day Low List, this may be an area of capitulation and proximity to a
bottom. Beans
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resistance from the May highs. The level also very nicely coincided with the 50%
retracement of the spring rally. Beans added 6 1/4, to 457.