The Chairman Moves Financial Futures
Federal Reserve Chairman Greenspan’s comments to the House Financial Services Committee that the economy is still underperforming and that “we are not free of the risk that economic weakness will be greater than currently anticipated, and (could) require further policy response†is dominating action in financial futures markets. Debt futures are rallying and stock indexes and the dollar are lower as the euro FX pops to a multi-month high.
The reaffirmation that the central bank is standing by the ready to continue its campaign of lowering interest rates if the economy fails to respond to the already 2.75% in cuts so far this year is sending interest rate futures across the yield curve higher. T-bonds
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PowerRating) and 10-years
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PowerRating) are higher for the eighth time in nine sessions and making good on Momentum-5 List readings and Off The Blocks entries. (After a lower start for M-5 futures, Off The Block entries kick in once a market trades above the high of the previous day’s last hour’s high). Both contacts eclipsed three-month highs. 10-years are pulling back at their same-day, Turtle Soup Sell points at the prior 20-day high of 105 7/32. The same-day TS trigger for USU1 stands at 102 24/32.
A lower inflation report from Europe is giving the impression that the Fed’s counterpart in Europe, the European Central bank or ECB, will have more leeway to lower interest rates to stimulate the continent’s economy. Coupled with Greenspan’s comments that the US economy may be worse off than previously thought, traders are taking a fresh look at battered continental currency futures and bidding the Euro FX futures
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PowerRating) to a two-month high. The highly correlated Swiss franc
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As the dollar falls against its major trading partners, dollar-denominated gold is on the rise and is up 2.3 at 270.90.
The doubt about the economic recovery from Greenspan is working to send stock index futures lower as participants see an even greater delay to improved corporate and earnings performance. Dow, Nasdaq 100 and S&P 500 futures are all holding just above their Pullback From Lows trigger points.
From the Implosion-5 List, August crude
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PowerRating) gapped lower and are trading back at the trigger of Off The Block shorts after half-way filling the morning gaps. Last night’s weekly API inventory report took an unexpected dip, showing the biggest gain in stockpiles since April. Inventories have risen 15% over the past three months, hammering prices.