Painting The Tape Beige
Bond traders looked at the Federal Reserve’s regional survey of economic conditions,
the so-called Beige Book, and saw what many have been perceiving for months —
an economy skidding to a halt.
Bond bulls were particularly encouraged today by the
Beige Book’s statement that found “declining consumer prices.”
With interest rates at a four-decade low, inflation remains a worry. But
with many commodities at multi-decade lows, the survey enhanced the view the
economy is deflating.
Last night’s Nightly
Futures Report pointed out that “A fundamental factor supporting
higher highs is deflation in commodity prices, i.e., the CRB index is nearly
at a three-year low. Grains are at contract lows (with beans matching the
1999 and 1973 lows) and selected softs, cotton and coffee, are at
multi-year lows. Further, oil and products prices (unleaded) are down as
much as 30% in three months. While low interest rates are very inflationary,
low commodity prices may hold inflation at bay — for a while.” (See
cotton below).
Also from last night’s report, a move in Dec. T-bonds
above 106 26/32 — as occurred today — clears the way for new highs. T-bonds
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closed up 28/32 at 107 3/32.
In an outside bar
that shows great promise for reaching even higher ground,
natural gas
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March 2002 sugar
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that continues to last only 90 minutes due to dislocations that occurred at the
WTC, jolted higher and is set to close at a one-month high. “Nascent
momentum” off recent lows was pointed out in this contract in Tuesday’s Nightly
Futures Report.
December lean hogs
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last night’s Pullback
From Lows List from the Futures Indicators Page and got hammered 1.625 to
47.700, hitting new contract lows.
A global glut amid
sagging demand took
December cotton
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fresh 15-year lows. Back-month contracts through December 2002 also hit
15-year lows. The leader of the
Implosion-5 List finished down .67 at 29.09
and made good on an Off The Blocks
short entry.