April 15th, 2010
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Mixed data leaves path of least resistance higher in Treasuries
Bonds and notes traded mostly higher on Thursday amidst a whirlwind of mixed economic data. However, questions in regards to the jobs recovery focused a considerable amount of attention on this week's weaker than expected jobless claims figures.
Initial claims for unemployment benefits rose to 484,000 last week to leave continuing claims at 4639k; the numbers were steep given the previous data. The Philly Fed came in at 20.2 to top estimates but industrial production was reported as a much smaller increase than was expected.
The lack of Treasury auctions took some of the edge off of the bearish trade and that might continue into next week. The Fed will be issuing $25 billion in bills, but that shouldn't have much of an impact on the longer maturities.
Although the correlation (or negative correlation) between stocks and bonds has been inconsistent we feel as though interest rate products are susceptible to being dominated by overflow action from equities. In other words, should the stock market finally fall from grace (we have almost given up on the idea) it is likely that the negative correlation between the asset classes will re-emerge. This could be what the market needs to push the note and bond to our upside target levels. However, as we have seen, stocks and bonds can travel in the same direction.
We are looking for the Treasury rally to continue overall. Our target in the 10-year note will be 117'10ish and in the June 30-year bond futures we are looking for 18ish.
* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.
Treasury Bond and Note Option Trading Recommendations
**There is unlimited risk in naked option selling.
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Treasury Bond and Note Futures Trading Recommendations
**There is unlimited risk in trading futures.
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Carley Garner
Senior Analyst / Commodity Broker
DeCarley Trading
1-866-790-TRADE
Local : 702-947-0701
http://www.DeCarleyTrading.com
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*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.
There is substantial risk of loss in trading futures and options.
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. 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.
