Holding Pattern Until More Action Develops
| PREVIOUS POSITIONS | ||||
|---|---|---|---|---|
| Market |
Long/Short |
Enter | size=2 color=000000>Exit | size=2 color=000000>P/L (per contract) |
| Sep. 99 T- bonds | Long | 115 | 115-07 | $218.75 |
| Sep. 99 S&Ps | Short | 1429 | 1410 | $4750 |
| Sep. 99 Swiss franc | Short | .6590 | .6585 | $62.50 |
CURRENT POSITIONS (AS OF 8/6/99) |
|||||
|---|---|---|---|---|---|
| Market | Date | Long/Short | Enter | Stop | size=2 color=000000>Target |
| Sep. 99 T-bonds | – | Flat | – | – | – |
| Sep. 99 S&Ps | – | Flat | – | – | – |
| Sep. 99 Swiss franc | – | Flat | – | – | – |
Note: All price levels are approximate.
T-bond futures
Note: A long position was established on Monday, Aug. 8, but not reflected in Monday’s update. Although the position was liquidated today (see below), we have included a chart and left the position in the current positions table above.
The September futures [USU9>USU9] dropped sharply today on the jobs data. Unemployment held steady at 4.3% with non-farm payrolls increasing 310,000 for July. Average hourly earnings also increased more than expected.
These factors further confirmed the view that the Fed will have to tighten rates at its next meeting. We are still on the sidelines but will look to buy on further weakness in the next couple of days because we still view the market as range-bound.
S&P 500 futures
The September contract [SPU9>SPU9] fell moderately today on the jobs report and the inflation scare. We missed our long buying opportunity yesterday.
The near-term picture is mixed right now. Volatility spiked yesterday on the CBOE volatility index (VIX) to the 32 level, which led the way for panic selling. Because panic selling usually results in a bottom, we think we are at a short-term low around these levels, but we are still on the sidelines.
Currency futures
The September Swiss franc [SFU9>SFU9] and Euro [ECU9>ECU9] were little changed today after the jobs data. We see the recent uptrend continuing as it gets fuel from weakening stock and bond markets. Capital flows are still moving to Europe, but financial assets are losing value there as well.
The fundamentals are pointing towards continued strength because of the improving European economies. This should put upward pressure on European rates and thus their currency. Stay tuned.
Next scheduled update: Monday, August 9, 1999
(Check “Today’s Schedule” every day on our home page to find out about additional updates.)