June 4th, 2010
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The safety trade is back!
A much weaker than expected employment report forced investors to rethink their overall strategy; as a result, money immediately flowed out of equities and into Treasuries.
The headline non-farm payrolls number came in at 431,000, which in more normal circumstances would have been a success. However, it is estimated at 411,000 of those were temporary government hires (Census workers). Adding salt to the wounds of the economic bulls, the previous month's figures were revised lower. The employment rate did come in a little lower than expected, but let's face it...whether it is 9.9% or 9.8%, it is still rather devastating. I can't help but recall the Super Bowl player that was interviewed earlier this year and in regards to the unemployment rate stated something along the lines of... "Only 10%, that's it? What is everyone crying about?"
News of Hungarian debt problems were also a driving force behind the Treasury rally. To make things worse, there were rumors circulating about a big European bank on the verge of collapse.
A tumbling Euro also worked in favor of bonds and notes. As investors scramble to move money out of Euro and into dollars, the most logical parking place is U.S. government fixed income...and some were buying gold.
Thursday's plunge did shake up our bullish bias a bit, but as it turns out we were right the first time. The September bond looks to be headed toward 125ish, in the meantime look for support at 122'28 and then again near 122ish. Depending on the feel of the market, we will likely be turning bearish at the noted resistance area but a complete retest of the recent highs is a real possibility.
If you are trading the note, resistance comes in near 121'09 but the high 121's isn't out of the question.
* 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.
**Seasonality is already be factored into current prices, any references to such does not indicate future market action.
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
http://www.ATradersFirstBookonCommodities.com
*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.
