Greenspan Causes Short-term Uncertainty

T-bond futures

Short-term perspective: The March contract [USH9>USH9] sold off again today after the two-year
note auction today was poorly received by investors. Greenspan’s remarks about the possible
need to raise
interest rates if the economy begins to heat up also added to downside pressure. However,
from a short-term perspective there are no low-risk entry points here. We will wait for our

Long-term perspective: Bonds are still in their downtrend. We’re maintaining our short
position in the March contract with stops in at the 125 area. The bond market is
still concerned about a strengthening economy later this year.

Currency futures

Short-term perspective: We are still long the March D-mark [DMH9>DMH9] from Monday.
We are looking to get
out around the 5660 level in the next 24 hours, with a stop in at the 5580 level.
The D-mark has sustained its weak tone from last weekend’s G7 meeting
longer than I expected. We are looking to exit the trade soon.

Long-term perspective: We are still short the March D-mark. Fundamental
worries about the stronger U.S. economy and the threat of higher rates here
are making foreign currencies less attractive because of their lower rates compared
to the dollar.

S&P 500 futures

We covered our short position in the March futures [SPH9>SPH9] today at the 1265 level.
The weak bond market proved to be too much for stocks, which finally gave in a
little today. We are now on the sidelines and waiting for another opportunity.

Next scheduled update: Friday, February 26, 1999

(Check “Today’s Schedule” every day on our home page to find out about additional updates.)