WHITEHALL INVESTMENT MANAGEMENT/COMMODITY TRADING SCHOOL
COMMODITY TRADING SCHOOL US FIXED INCOME REPORT 07/07/09
SUMMARY OF DATA 07/08/09
10:30 AM EIA INVENTORY REPORT (EXP RBOB BUILD 2.2 M),1:00 PM US 10 YEAR NOTE AUCTION
07/07/09 SUMMARY OF DATA
US 3 YEAR NOTE AUCTION ($35 B, BID TO COVER 2.61, YIELD 1.94%)
TREASURIES RISE AGAIN AS EARNINGS UNCERTAINTY OVERCOMES FORCED RESULTS AT US 3 YEAR NOTE AUCTION. .
US TREASURIES received a boost from uncertainty with regards to corporate earnings and their ability to justify the near 40% gains in the major equity indices since the current bottoming out in March of this year. Earnings uncertainty coupled with a stabilizing US Dollar and low trading volume allows Treasuries to push up to their highest closes since May.
The expectation of a sobering earnings season allowed Treasuries to overcome what turned out to be a disappointing US 3 year note auction. Bid to cover for the “recession/recovery” standard of government debt was near average at 2.61. The level of sales came about through offering of yield that was nearly 0.02 basis points above expectations. The apparent difficulty in moving an offering of relatively short commitment debt may not bode well for the 10 and 30 year auctions scheduled for Wednesday and Thursday of this week. Traders will likely be watching for potential stabilization in the US dollar that may offer some support for demand for longer yielding Treasuries. Reports concerning the possibility of record high yield defaults may offer some support for Treasuries in the near term. However calls for “miraculous” redirection of the unprecedented levels of liquid capital funds may offer a new round of support for higher yielding debt and could put Treasuries back on a weaker course by mid August.
TECHNICAL OUTLOOK-US 30 YEARS- The longer end of the yield curve reached the target level of resistance at 119-13 and is poised to test the 119-19 level. The market is looking extremely overbought at these levels and should find strong resistance at 119-19. If this level can hold, the market should stage a pullback to 118-030, while a break and close above should set up for a test of 120-16.
US 10 YEARS-US 10 years are even more overbought and should find strong resistance at 117-160. Market should be looking to correct back to low of Tuesday session at 116-160.
EURODOLLARS- December Eurodollars upward momentum continues to appear to be setting up as a scale trade. One last pop to 9926.0 should be the end before a overdue correction stages a pullback initially to 9916.0.
US DEBT FUTURES
US U9 (US 30 YRS)
118-220
119-205
118-065
118-265
+25.5/32nds
TY U9 (US 10 YRS)
116-245
117-125
116-175
117-095
+14.5/32nds
ED Z9 (EURO $)
99.205
99.225
99.180
99.205
0
Prepared by Rich Roscelli & Paul Brittain.
EMAIL QUESTIONS OR COMMENTS TO RICH@BINVSTGRP.COM
Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Whitehall Investment Management, its officers and directors may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.
