A Government Rally
Bonds were the place to be again as they rallied
nearly three points for a second day. Yesterday, the Treasury Department
said it would discontinue the issuance of 30-year bonds, claiming it would
save scads of money with shorter-dated instruments. Institutions seeking to
match longer-term obligations with T-bond’s “risk-free” rate
scrambled to lock in rates on an asset whose supply will dwindle. The move
has also had a profound short-term effect on long-term interest rates, as
the yield on bonds dropped inversely to price.
T-bonds
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10-year notes
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List, both soared, extending their winning streak to eight consecutive
gains. Off The Blocks
(OTB) long entries worked out for both contracts again. USZ1 made it
eight-for-eight in OTB entries.
But as stock index futures pumped higher (all three
triggered out of Pullback From Highs List),
bonds retraced from their 112 18/32 high to around their opening gap-up
print, closing up 13/32 at 110 27/32. The also left a candlestick bar
indicating a top.
Stock index futures responded favorably to Microsoft
news that a speedier settlement may ensue. Microsoft added 5%, boosting the
majors:
December Nasdaq 100 futures
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S&P futures
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+205.0 at 9255.0.
Norway, one of the
largest non-OPEC oil exporters, said it would not comply with
requests from OPEC to curb oil exports. Oil prices are at contract lows and
the cartel is trying to strengthen the effect of an output cut planned for
January. Mexico and Russia, two other major oil exporters, have said they
would not comply with requests for output cuts either. Russia last week
actually announced plans to increase output.
This means supply
could continue to increase amid evidence of a continued reduction in US and
global demand. Today’s NAPM came in at a 10-year low, demonstrating waning
demand from the manufacturing sector, an area that consumes about
one-quarter of oil and product supplies. A fall in consumer spending today,
the worst in almost 15 years, also provides evidence that fewer individuals
are taking trips to other cities or even to the mall. Airlines consume about
8% of national oil supplies. Rising numbers of unemployed are also expected
make consumers more cautious about any expenditures.
December crude oil
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heating oil
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unleaded gasoline
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Implosion-5 List and accelerated downhill after making good on Off The Blocks
short entries. While the OTB
short entries do not go short on lap moves up until the market trades below
the low of the prior day’s final hour (or opposite for longs), earlier entry
can sometimes be had in intraday Pullback From Low situations, such as a
trade below the low of the high bar in a pullback.
Canadian dollars
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Implosion-5 List and made good on OTB shorts, a five-for-five day.
Coffee
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shortened trading (NYBOT contracts trade for 90 minutes in staggered
starts). A storm approaching Central America could strengthen into hurricane
status and bring damaging rains. Commodity funds are also net short —
according to the Commitment Of Traders Report — and they will begin
covering shorts and buying to re-establish positions in back-month contracts
as the December contract approaches expiration.