Bonds Preempt Money Chief
Interest rate futures are rallying for a second day out
of Pullback From High setups, encouraged by this morning’s Producer Price Index
that showed wholesale inflation remains tame. A slowing economy has increased
the likelihood that central bank chief Alan Greenspan and the Federal Reserve
Open Market Committee will soon lower interest rates to stimulate an economy
that may be slowing toward a recession.Â
Tony Crescenzi pointed out in his BondWire
that the Federal Fund futures contracts have rallied this morning, increasing
the odds that the Fed will ease short-term interest rates. Crescenzi calculated
that the January Fed funds contract “is pricing in a rate of 6.435%
indicating as much as a 25% chance of a rate cut at the December 19 FOMC
meeting, up from about 15% yesterday. The April contract is pricing in a rate of
5.995%, indicating that the market is looking for 50 basis points of rate cuts
between now and the March FOMC meeting.”
Both
T-bonds
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10-year notes
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are making good on Momentum-5
List readings, up 26/32 and 17/32, respectively.Â
March dollar index futures
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rallied yesterday but pulled back below the halfway point within Wednesday’s
bar, setting up today’s move which is declining after triggering a Pullback From Lows
setup.Â
Going the other way and mentioned in yesterday’s futures
alert as likely to progress,
euro FX futures
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setup.
Swiss francs
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Energy prices from the
Implosion-5 List— January
crude oil
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heating oil
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lower despite a drawdown in Tuesday’s API weekly stock piles figures as Iraq
resumes exports under a renewed United Nations deal and pricing scheme.Â
Coffee
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PowerRating) continues tanking after a
Brazilian growers cooperative showed approximately 50% more coffee beans in
storage than last year. Coffee is the leading contract on the Implosion-5 List
and has been trending lower with consistent down readings on the
Futures
Trend Matrix.