Bonds Away!
T-bond futures dropped like a lead balloon, tanking with a passion as the full
effect of the Federal Reserve’s fourth interest rate cut of the year took
hold.Â
The rapid demise of T-bonds demonstrate debt traders’
belief that the Fed’s monetary-policy loosening cycle may be drawing to a close, that the
economy is on the road to recovery, and that perhaps even inflation is in the
offing. June T-bonds
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Implosion-5 List for
weeks, gapped lower and provided entry ten minutes after the opening tick. A
breakdown below the first swing low out of a descending triangle and two
intraday symmetrical (each four bars long) pullbacks provided two other obvious
entries. Basis June closed 1 15/32 lower at 100 17/32. This contract has shed
nearly seven whole points in just under one month. Also dive bombing, 10-year notes
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erased 27/32 to close at 104 7/32.
Interest rate futures are also sinking as traders rotate
out of the perceived safety of bonds and into equities in what is believed by
many to be the beginning of a new bull market. Stock index futures got off to a
mixed start with traders cashing in some of the gains from one of the biggest
days in equity futures history yesterday, but the strong earnings performances
from IBM, Apple Computer, and EMC maintained the enthusiasm for tech. After
rallying over 50 in the first half of the session, Nasdaq 100 futures
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ratcheted above the intraday high and legged up to a triple-digit gain of 114.00
to 1953.50. The price persistency in the Naz futures was inspiring enough to get
Dow futures
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resulted in the blue-chip futures closing up 70.0 at 10,735.0. The June Spooz
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Yesterday, European currency futures sold off initially to multi-month lows on
the surprise rate cut, but recovered to close slightly positive,
or at nearly breakeven, leaving tails at lows and Turtle Soup Plus One Buy
setups. Today,
euro FX futures
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good on the “soup” setups and closed off their highs of the session as
traders adjusted bond
portfolios to take account of the relatively lower interest rates now available
in the US. Short-term rates in the States now stand at 4.5% while in Europe
they are 4.75%. Yesterday’s move should put the pressure on the European Central
Bank to cut interest rates before the G-7 meeting of industrial nations at the
end of this month. ECM closed .0091 higher at .89350 and Swiss francs rallied
.0069 to .5859. June dollar index futures
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115.17
June gold
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266.0.
Grains closed lower on thoughts that blocked river traffic
from a flooded Mississippi river will hamper exports and cause supply
backlogs.Â