June 17th, 2010
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Bonds and gold soar, but stocks don't sour
We have been complaining about a lack of economic data and today we got what we were looking for. The morning was filled with news, albeit disappointing. Weekly jobless claims were 472,000, up from consensus 150,000 and the Philly Fed index was reported at 8; less than half of expectations. Leading indicators were only a small miss at .4%. Inflation remains under wraps, this isn't a bad thing but it is bond bullish. CPI was reported as a draw of .2%.
As a result, investors seemed to be looking to "safer" assets. However, the safety phenomenon wasn't spread throughout all of the financial markets. For instance, Gold prices saw a record close at 1247.70 on the day and the long bond traded over a handle higher than the previous day's close for much of the day. On the other hand, the currency markets didn't comply with the day's safety theme. Dollar buyers were scarce and the Euro continued to make its way higher.
As predicted in yesterday's newsletter, the short squeeze in the Euro extended into today. However, our expectations for a higher Euro/lower Treasury scenario didn't play out. The new disconnect between currencies and Treasuries is a bit suspect and leaves our analysis less convincing we originally thought.
Let's face it, Treasuries have been going nowhere fast and with tomorrow's stock option expiration, end of week trade and what is expected to be incredibly low volume, just about anything is possible.
We doubt that the recent decline in volatility will last. If you are a short option trader in Treasuries, we suggest you take profits (if possible) and move to the sidelines.
We see near term resistance in the September 30-year bond futures at 126 and support at 121'23.
* 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 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.
