Bond buying Fueled by Rally in European Bonds
| 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 |
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 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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