T-bonds Make It Four For Four

  • May 3, 2001
  • Marc Dupee


T-bonds
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initial jobless claims jumped unexpectedly to their highest level in five years.
Higher unemployment implies that the Fed will have to remain on the offensive to
revive the economy and keep joblessness under control. 

Economic data has been mixed, however. GDP last quarter
came in nearly twice as strong as expected at 2%, implying the Fed’s four
interest rate cuts totaling 2% have been successful in warding off recession.
The focus is now on the the Fed’s FOMC meeting on May 15 and the market is
beginning to price in an aggressive cut. T-bonds are up 27/32 at 102 12/32.

The June Federal Fund futures
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trading near contract highs and pricing in a 56% chance of a 50-basis-point cut
(a .25% move is assured, according to the this highly accurate measure). 

Five down signals on the Market
Bias Indicators Page suggested stock index futures could decline from
yesterday’s intraday double top formation. Both the spooz
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futures
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pointed out in last night’s Futures Market Recap and have made good in measured
moves down out of those patterns.

Energy contracts are rebounding after yesterday’s steep
selloff on bullish API weekly inventory statistics. Unleaded gasoline
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is showing that it could still set new contract highs by logging an outside day
on its high. In yesterday’s API, gasoline did rise by 300,000 barrels last week,
but that gain followed a hefty two-million-barrel drawdown the week before. With
fragmented “cleaner burning” (reformulated) gasoline standards,
shortages in regulated cities could emerge causing spikes in the futures.
Unleaded has stair-stepped up in two steps for a .0294 gain to 1.0595 and is
pulling back to test support at 1.0600. 

The leading contract on the Momentum-5
List, July sugar [SBN1|SBN1, is continuing to a new three-month
high and has made good on an
Off The Blocks
 entry. The yearly high in the 9.40 area will be closely eyed by
profit-takers.Â