Watching For PPI and CPI Direction
| PREVIOUS POSITIONS | ||||
|---|---|---|---|---|
| Market |
Long/Short |
Enter | size=2 color=000000>Exit | size=2 color=000000>P/L (per contract) |
| Sep. 99 T- bonds | Short | 115-23 | 115-06 | $531.25 |
| Sep. 99 S&Ps | short | 1380 | 1400 | -$5000 |
| Sep. 99 Swiss franc | Long | .6530 | .6580 | $625 |
CURRENT POSITIONS (AS OF 7/12/99) |
|||||
|---|---|---|---|---|---|
| Market | Date | Long/Short | Enter | Stop | size=2 color=000000>Target |
| Sep. 99 T-bonds | – | Flat | – | – | – |
| Sep. 99 S&Ps | 7/9/99 | Short | 1412 | 1435 | 1405 |
| Sep. 99 Swiss franc | 7/9/99 | Long | .6380 | .6300 | .6390 |
Note: All price levels are approximate.
T-bond futures
The September futures [USU9>USU9] rallied today on moderate volume. We don’t expect any significant move until later this week when the PPI and CPI are released (see my commentary from Friday, July 9). The market will pay particularly close attention, as I am sure the Fed will do. There is a growing difference of opinion as to whether the Fed will raise or leave rates unchanged. Stay tuned.
S&P 500 futures
Again, we don’t anticipate any big moves until after the PPI is released. As a result, we will try to cover our short position in the September contract [SPU9>SPU9] tomorrow at the 1405 area. The VIX (the CBOE volatility index) is starting to reach noticeably low levels, but it needs a catalyst to spike up.
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| Figure 1. September S&P futures (SPU9), 15-minute bar. Source: Quote.com.
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Currency futures
The September Swiss franc [SFU9>SFU9] and Euro [ECU9>ECU9] fell today as German industrial production for May declined by .2%. This was not expected–the market was looking for a .75% increase.
We still think there is a good chance the European Central Bank will surprise the market with some type of intervention, but we are concerned with the downward follow-through from Friday. Consequently, we will try to exit our long position at the .6390 area for a small profit.
Next scheduled update: Wednesday, July 14, 1999
(Check “Today’s Schedule” every day on our home page to find out about additional updates.)