Bond buying Fueled by Rally in European Bonds

  • October 27, 1999
  • Manuel Ochoa








PREVIOUS POSITIONS
Market

Long/Short

Enter
 size=2 color=000000>Exit size=2 color=000000>P/L (per contract)
Dec. 99 T-bonds Long 111-25 111 -$781.25
Dec. 99 S&Ps Short 1298 1275 $3500
Dec. 99 Swiss franc Long .6795 .6690 -$1312.50






CURRENT POSITIONS (AS OF 10/27/99)
Market Date Long/Short Enter Stop size=2 color=000000>Target
Dec. 99 T-bonds – Flat – – –
Sep. 99 S&Ps – Flat – – –
Dec. 99 Swiss franc – Flat – – –



Note: All price levels are approximate.

T-bond futures

If tomorrow’s Employment Cost Index comes in stronger than expected, the market will most likely give back all of today’s gains
The December futures [USZ9>USZ9] bounced today on strength from European bonds and this morning’s Durable Goods report.

European money supply figures released today were higher than expected, which only encourages the Europeans to raise rates. But the market was already expecting this, and buyers quickly came in because they think things can’t get worse for bonds in the near future.

The rally in European bonds helped U.S. bonds, and the weaker-than-expected Durable goods report fueled even more buying. However, it’s dangerous to take a position now because if tomorrow’s Employment Cost Index comes in stronger than expected, the market will most likely give back all of today’s gains.

Stock index futures

It’s a bullish sign that tech stocks were weaker today, but still couldn’t drag down the S&Ps
The December S&Ps [SPZ9>SPZ9] continue to be extremely choppy. We have been (gratefully) on the sidelines as we await tomorrow’s economic data.

The tech stocks were weaker today, but they could not drag down the S&Ps–a bullish sign. However, we are not willing to establish a new position ahead of the tomorrow’s reports.

Currency futures

The December Swiss franc [SFZ9>SFZ9] and Euro [ECZ9>ECZ9] was down on the same factors that drove U.S. bonds up today. Higher European rates should be bullish for this market, but since traders were already expecting this, they took profits on their longs. We are on the sidelines for now.

Next update: Friday, October 29, 1999.

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