Bonds Boom Confidently
Interest rate surged as weak economic reports worked to
bolster the belief that the Federal Reserve will take aggressive action to stave
off a slowdown by cutting interest rates before its March FOMC meeting. Consumer confidence,
a highly anticipated report because of the emphasis Alan Greenspan accorded it
in his congressional
testimony on the economy this month, dove for the fifth consecutive month to a
five-year low. Â
The fresh evidence of declining confidence, as well as a
6% tumble in January durable goods orders, dovetailed with ex-Fed governor Wayne
Angell’s two calls since Friday that the Fed will move this week to cut interest
rates and reinvigorate the economy.Â
T-bonds
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15/16. 10-years
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PowerRating) added 14/32 to 105 28/32 and hinted they
could rally by ascending to the Momentum-5
List. The contracts gapped open but provided multiple, intraday pullback from
high entries.Â
Federal funds futures rallied to contract records on speculation about
inter-session cuts. The April contract priced in as much as a 75% chance of a
75-basis-point cut by next month, but dropped the odds of a .75% cut by the
March meeting to 50% by the end of the session. The July contract
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PowerRating) fully pricing in a 75-basis-point hike and as high as a 96% chance of a
100-point cut before reducing the chance of a 1% move by the June meeting to
68%.Â
Word of severely reduced production from African
mines sent gold up for the fifth consecutive day. As highlighted in
TradingMarkets Pre-Opening
Futures Outlook, the market is still severely short gold according to the
Commitment of Traders report, implying the short-covering rally could see more
upside. Gold also ascended to the Momentum-5
List after its expansion bar yesterday and recent lap-up openings. April
gold closed 1.6 higher at 268.4.Â
April lean hogs
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PowerRating) and March pork bellies
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continue to remain on a tear due to the foot-and-mouth cattle disease outbreak
outbreak in the United Kingdom. Both contracts
are also on the Momentum-5
List: bellies rallied 1.600 to close at 77.650 and hogs closed up .800 at
63.25.
Coffee
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PowerRating)Â continues to yield signs
that it may be bottoming. It was on the Momentum-5
for Monday, formed an outside bar that closed above its mid-point yesterday, has
been printing higher lows, and has held above its Feb. 20 Turtle Soup Plus One
buy Pivot. The May contract closed .75 higher at 66.30.
Sugar
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PowerRating) sank in a big down-bar on
speculation of large crops from Brazil and Australia. Sugar had been trading at
10-day lows the past two days before tanking .32 to 8.63 in a big down expansion
bar.Â
The leading contract on the Implosion-5 List,
May cotton
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PowerRating), also tackled new lows before profit-taking and
settled .30 lower at 53.12.