Reports Cause Surprise Activity
T-bond futures
Short-term perspective: The June futures [USM9>USM9] rallied 26 ticks on a jobs report that
showed
unemployment increasing to 4.4 percent from 4.3 percent. The consensus was for a drop,
which would have further confirmed fears of a stronger economy. Bonds were
up over two points during the session but had backed off about a point by the close.
We were
looking to buy this morning on a dip (regardless of what the report indicated) because
we were convinced the market was oversold. We never got the chance, though,
and thus we must wait for another opportunity.
Long-term perspective: Bonds are still in a downtrend–fears of a too-strong economy have not
disappeared, and it will take more than one report to ease the market’s misgivings.
We remain short the June contract with stops in at the 124 level.
Currency futures
Short-term perspective: The March D-Mark [DMH9>DMH9] was quiet today, which was
surprising. We expected a rally from the employment report, but this market obviously
remains in weak hands. We are on the sidelines here.
Long-term perspective: We still have our short position in the March contract, as
the potential for higher U.S. rates continues to pressure this market.
S&P 500 futures
We established a short position in the March
futures [SPH9>SPH9] at 1275 because we think the market is
temporarily overbought. Bonds backed off a point from their high today and S&Ps
made new highs after that. That’s quite bullish sign, and a good reason to attempt a short trade.
Next scheduled update: Monday, March 8, 1999
(Check “Today’s Schedule” every day on our home page to find out about additional updates.)