Wednesday’s Futures Trading Outlook

On the first day back from an extended
weekend thanks to the Labor Day
holiday,
the markets suffered some heavy casualties. Several factors having to do
with the global economy hit the market at the very beginning of trade and never
let it come back.

First, overnight, Japan’s Nikkei fell to its
lowest level in 19 years after losing 3.2% in trading. In Italy, consumer
confidence fell to a three-year low. And third was the weaker than expected ISM
Index for August. This has raised concerns among traders and has them renewing
talk about a double-dip recession in the US economy.

The treasury market was moved by talk that a possible dip back into recession
would cause the Fed to reduce interest rates at the next Fed meeting. This
pushed both the 10-year note and 30-year bond. The Sept 10-year note (TYU2)
rallied strong to hit a 20-day high, breaking above its previous resistance
level of 114.00. TYU2 closed at 114.42, up 1.25, or 1.10%.

The Sept. 30-year bond (USU2)
rallied to a new 20-day high, closing at 112.71, an increase of 1.84.

Possible long candidates