Economy Slows, Bonds Party

  • June 29, 2000
  • Marc Dupee

More signs of an economic slowdown and the
first hints from the Fed that they have handled inflation, sent T-bond futures
raging in their best gain in a month. New home sales fell, dropping to their
lowest in eight months, providing the economic backdrop to Thursday’s decline
that came one day after the Federal Reserve decided to leave short-term interest
rates unchanged. Late in the day Thursday, the Fed released the minutes from
their May meeting, and in the document the Fed made statements recognizing that
the economy was showing “tentative” and “preliminary” signs
of slowing. Another round of scheduled debt re-purchases to the tune of $2
billion added to the rally. September T-bonds
(
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at 97 16/32.

 

Stock index futures followed through to the downside
after Wednesday’s post-Fed, reversal from highs, following on pit-pro Lewis
Borsellino’s commentary
prior to the interest rate announcement : “The trend will likely assert
itself in the final hour of the day. Then stay tuned for the trend to emerge
and/or be solidified in the next few days.” The September S&P futures
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added an additional 18 handles from Wednesday’s close before ending down 14.20
at 1457.00.
NASDAQ 100 futures
(
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financials were in large measure responsible for the 105.10 loss in Dow futures
(
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PowerRating),
which closed down 124.0 at 10,516.0. 

 

Foreign currency futures traded in a range after gapping open in response to the
slower interest rate growth in the US. From the pullback from lows list, euroFX
futures
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(
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ended .0029 higher at .6158. September dollar index futures
(
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PowerRating) slipped
.63 to 106.56.

An U.S. Energy Information Agency official giving
testimony before the Senate said shortages of distillates (diesel, jet fuel and
heating oil) were a problem the nation will likely face this fall. Heating oil,
the leading contract on the Momentum-5
List rocketed to new highs on the statements, gaining .0292 to .8460, and
dragged other energy contracts higher in its wake. Crude oil
(
CLU0 |
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PowerRating) also
added .82 to close at 32.72.

Soybeans came back after a two-week implosion that had taken contracts to their
lows of the year. Forecasts of hotter weather were the catalyst for the move up
as well as position squaring ahead of Friday’s Department of Agriculture’s
quarterly stocks and planted acreage reports. November beans
(
SX0 |
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PowerRating) rallied 8
to close at 491 3/4.

Sugar
(
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PowerRating) came back onto the Momentum-5
List Thursday and rallied .32 to close at a contract high of 8.94. Contracts
such as sugar that first appear or resume their standing on the Momentum-5 List, are usually good candidates for follow-through momentum trades. You can get in
on momentum trades by utilizing my Off
The Blocks method. 

 

From the
Implosion-5 List
and, with a down rating on the
Futures
Trend Matrix, December cotton
(
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PowerRating) moved lower for a seventh day,
clipping .44 to 58.17.