Watch For Fed Reports Before Moving On T-bonds
| CURRENT POSITIONS (as of 5/10/99) | ||||
|---|---|---|---|---|
| Market | Long/Short | Entry | Stop | Target |
| June T-bonds | Flat | – | – | – |
| June S&Ps | Flat | – | – | – |
| June Swiss franc | Flat | – | – | – |
Note: All price levels are approximate.
Currency futures
As we suspected, the June Swiss franc [SFM9>SFM9] and Euro [ECM9>ECM9]
both rallied today on hopes of peace in Kosovo. Luckily, we managed to cover our short position in the franc last night on Globex at the .6692 level (we had entered at .6754).
The market (like the bonds) looks like it could go further from here, but we are flat for now. If the market rallies on further peace talks we will look to get short.
S&P 500 futures
The June contract [SPM9>SPM9] dropped today. Bonds could support a stock rally, and we see this as a possible sign of weakness. However, as of now, we have no clear reading on the market. Volatility levels are a little higher than normal, but we don’t see any good trades. Stay tuned.
T-bond futures
The June futures [USM9>USM9] rallied slightly today on bargain hunting. Buyers were encouraged when the Fed confirmed it was buying bonds this morning. We were looking for a dip today to get long but we didn’t get it.
The market looks like it could bounce from here but the probabilities aren’t high enough to justify a long trade. We are better off waiting for a more promising opportunity. The Producer Price Index (PPI) and Consumer Price Index (CPI) numbers come out on Thursday and Friday, respectively; these are the reports of interest this week. Keep watching.
Next scheduled update: Wednesday, May 12, 1999
(Check “Today’s Schedule” every day on our home page to find out about additional updates.)