Wednesday gave us another $10 billion reduction to the Fed’s bond purchase program. The second meeting of the Janet Yellen era told us the quantitative easing program will now be at the rate of $45 billion per month, staying on track with earlier guidance. The results of the latest FOMC meeting were expected by most market participants, and market reaction was fairly subdued.
In its statement on the latest decisions the Fed wrote “Information received since the FOMC met in March indicates that growth in economic activity has picked up recently, after having slowed sharply during the winter in part because of adverse weather conditions.” I guess I’m not the only one who has complaints about the weather lately. With the path set for a continued taper, market observers are going to look closely at employment numbers for hints of any change in interest rates.
The Jobs Data
Right now many forecasters are looking for better numbers in Friday’s employment numbers. Many are basing an increase in Nonfarm Payrolls on improved weather conditions (seems like everyone likes picking on the weather) for April. It’s very challenging to play number or reports so I tend to be a bit less risky in these markets. I’m looking for a continued move to the upside, using a bull call spread to take advantage of a potential move higher. I like buying the May E-Mini S&P 500 1880-1900 call spread at 8 points or better. Short term trade on this one, expiration is on 5/16, but I don’t want to be in this for more than a week. I am setting an initial target exit at 18 points, and trying to limit a loss to 4 points.
Webinar
For those interested Walsh Trading is holding our weekly grain webinar series this Thursday March 13th at 3 pm central time hosted by our Senior Grain analyst Tim Hannagan. Tim has been ranked #1 by Reuters and Bloomberg in 2011 and 2012 for his most accurate end of year price predictions for soybeans and corn. Registration is free and if you cannot attend live, a recording will be sent to your email upon signup.
RISK DISCLOSURE: THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES AND OPTIONS TRADING. THIS REPORT IS A SOLICITATION FOR ENTERING A DERIVATIVES TRANSACTION AND ALL TRANSACTIONS INCLUDE A SUBSTANTIAL RISK OF LOSS. THE USE OF A STOP-LOSS ORDER MAY NOT NECESSARILY LIMIT YOUR LOSS TO THE INTENDED AMOUNT. WHILE CURRENT EVENTS, MARKET ANNOUNCEMENTS AND SEASONAL FACTORS ARE TYPICALLY BUILT INTO FUTURES PRICES, A MOVEMENT IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE RELATED FUTURES AND OPTIONS CONTRACTS.
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