Air Attacks Strike Financials, Energies
Air attacks in the Middle East spurred big jumps in the
prices of financials and energies, furthering the recent demise of interest rate
futures as oil rallied and traders scrambled for dollars.
In a tit-for-tat confrontation, Israel bombed a Lebanese
radar site in retaliation for a Hezbollah militia attack on Israeli tanks two
days ago. The rise of tensions in the Middle East ratchets up inflationary
expectations as an ever-tighter energy supply situation could spell higher
prices for fuel and for all products that are either made from petroleum
products or require energy to bring them to market.Â
Energies, which have been dominating the Momentum-5
List, traded to new multi-month highs, basis May. Today’s outside, expansion-bar-at-high in
unleaded gasoline
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1.0430, adds further evidence of a runaway market situation in gasoline futures,
a development highlighted in recent Mid-day Alerts and Futures Recaps.
Momentum-5 member heating oil
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to the lion’s share of itoday’s gains, climbing .0405 to .8210, and crude oil
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Interest rate futures, now showing prominently on the Implosion-5 List,
found the air strikes and the higher energy prices they inspired added reason
to continue selling bonds. T-bonds
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points in 16 sessions. Tony Crescenzi pointed out on TradersWire’s Bond Wire
myriad reasons for the decline, including hopes for higher stock market prices
amid signs of of economic recovery. Although the market was closed Friday, the
government reported that corporate inventories fell precipitously last month,
indicating the overproduction that has characterized this economic downturn is
drawing to a close.Â
Bond traders, considered by some to be more sophisticated
than stocks traders, appeared to adjust positions ahead of a perceivedÂ
move higher in stocks, even as stock index futures slumped. T-bonds closed 1
4/32 lower at 101 6/32 and 10-year notes
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lower at 103 30/32. Although imperfect, both contracts set up Turtle Soup Plus
One-like buy situations in what are now very oversold markets.Â
June dollar index futures
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the Israeli air strike. The dollar often rallies in times of international
strife and uncertainty as traders flee to the perceived safety of the dollar. All of the major currency futures
closed lower against
dollar index futures with the DXM finishing the session up .63 at 116.26.Â
The yen
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pressure from the Japanese government’s statement over the weekend that Q1 GDP could
slow from .8% to .5% and after economic officials said the economy could
actually shrink going ahead. Intervention by the Bank of Japan, a move that
would cause the yen to rally sharply (but only in the short-run) is not seen
before the spot market hits 130, which translates approximately to .7700 in the
June futures. June yen futures closed down .0042 at .8109.
May wheat
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PowerRating) extended Friday’s 6-cent rally with a move 5 cents higher before paring gains to close 2 3/4 higher
at 269 1/2. No rain, and then too much rain,
have reportedly forced Kansas and Oklahoma farmers to abandon as much as 20% of
arable acreage.
Rounding out a good day of gains from contracts on the Momentum-5
List,
June lean hogs
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