T-bonds Present Buying Opportunity
| PREVIOUS POSITIONS | ||||
|---|---|---|---|---|
| Market |
Long/Short |
Enter | size=2 color=000000>Exit | size=2 color=000000>P/L (per contract) |
| Sep. 99 T- bonds | Short | 115 | 115-15 | -$500 |
| Sep. 99 S&Ps | Short | 1342 | 1349 | $-1750 |
| Sep. 99 Swiss franc | Long | .6525 | .6540 | $187.50 |
CURRENT POSITIONS (AS OF 6/23/99) |
|||||
|---|---|---|---|---|---|
| Market | Date | Long/Short | Enter | Stop | size=2 color=000000>Target |
| Sep. 99 T-bonds | 6/23/99 | Long | 114-05 | 113-09 | 114-25 |
| Sep. 99 S&Ps | – | Flat | – | – | – |
| Sep. 99 Swiss franc | 6/23/99 | Long | .6530 | .6435 | – |
Note: All price levels are approximate.
T-bond futures
The September futures [USU9>USU9] fell today on corporate hedging, comments by Fed officials on inflation, and the weaker-than-expected two-year T-note auction.
Corporate hedging was moderate but the market took this as a cue to sell. Fed official comments last night also contributed to a bearish open this morning, exacerbated by the note auction’s poor reception. These factors together were enough to bring out the bears today.
The Fed will meet next week, and we view the action today as just part of a trading range that is being formed. We went long today at 114 05/32 area, with a stop around 113 09/32 and a profit target at the 114 25/32 level.
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| Figure 2. September T-bond futures (USU9), 15-minute bar. Source: Quote.com.
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S&P 500 futures
We covered our short position in the September contract [SPU9>SPU9] around 1349 yesterday. Bonds set the negative tone for stocks today. The market is still trying to adjust to the strong possibility of higher rates, and now it is examining the possibility of a second hike in the future. We are on the sidelines for now but will look to buy tomorrow on weakness. Stay tuned.
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| Figure 1. September S&P futures (SPU9), 30-minute bar. Source: Quote.com.
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Currency futures
The September Swiss franc [SFU9>SFU9] and Euro [ECU9>ECU9] declined slightly today on follow-through from yesterday. Political comments from Euroland officials Monday and further selling from funds continue to pressure currencies.
But these factors are not enough to keep pushing down this market in the short term. We went long the franc at the .6530 area because we see a small rally ahead. Our stops is around .6435. Check back for our profit target.
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| Figure 3. September Swiss franc futures (SFU9), 15-minute bar. Source: Quote.com.
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Next scheduled update: Friday, June 25, 1999
(Check “Today’s Schedule” every day on our home page to find out about additional updates.)