Air Raids Boost Energies and Dollar

  • April 16, 2001
  • Marc Dupee

In a tit-for-tat confrontation, Israel bombed a Lebanese
radar site in retaliation for a Hezbollah militia attack on Israeli tanks two
days ago. The rise of tensions in the Middle East is working to exacerbate a
tight supply situation in US energies and to spur a flight to the perceived
safety of the dollar internationally.

Energies have been dominating the Momentum-5
List and are trading at new contract highs, basis May. Today’s outside,
expansion-bar-at-high in
unleaded gasoline
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market situation in the contract, a development highlighted in recent Mid-day
alerts and Futures Recaps. Momentum-5 members heating oil and crude are also up
strongly. 

June dollar index futures
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the Israeli air strike. The dollar often rallies in times of international
strife and uncertainty. All of the major currency futures are lower against
dollar index futures and the DXM is up .72 at 116.35. 

The yen
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due to the Japanese government’s statement over the weekend that Q1 GDP could
slow from .8% to .5% and after economic officials said the economy could
actually shrink going ahead. Intervention by the Bank of Japan, a move that
would cause the yen to rally sharply (but only in the short-run) is not seen
before the spot market hits 130, which translates approximately to .7700 in the
June futures. 

May wheat
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have reportedly forced Kansas and Oklahoma farmers to abandon as much as 20% of
arable acreage.

From the Implosion-5 List,
T-bonds
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10-year notes
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moving in counter-lockstep with any rally in stock index futures. Bonds are
down more than half-point.