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Weekly Interest Rate Futures Review -- December 29, 2006
Friday, December 29, 2006

With the holiday amongst us and the end of the year quickly approaching, the volume traded in the markets has been much lighter than normal. Amongst reports out this week, the new home sales for the month of November came out stronger than expected at 1.017 million units versus 1.015 expected (up 3.4%). The previous month also came out revised to 1.013 million units versus 1.004 million units as previously reported. According to Gartman, the number of homes for sale fell as the number of homes sold increased putting the supply at 6.3 months. However, the supply level is believed to be flawed and to be higher than what is reported. The existing home sales came out at +.6% at 6.28 Million homes sold for November.

The Redbook retail sales also came out +2.9%. This increase in retail sales is likely attributed to seasonal sales strength though.

The solid numbers have pressured the interest rate market over the past couple of weeks leaving the market technically vulnerable to more downside price action. The Fed members continue to comment on the importance of controlling inflation in the market which is also keeping near term upside momentum contained.

March Ten Year Note Technical Levels:

Trend Direction: Long Term Trend is Lower; Short Term Trend lower. The March Ten Year Notes would need to rally through 110-05.0 to signify a long term trend change in the market based on the weekly TY chart. The trend is your friend. The longer the trend, the more significant the support & resistance is. The 108-02- 108-04 area is extremely critical for the market.

Resistance: 108-02.0- 108.04.5; 108-22.0; 109-21; 110-02.0

Support: 107-17.0 - 107-25.0; 106-27.0

Financial Reports for the week of January 2nd - January 5th:

Tuesday: ISM Manufacturing Index - 9:00 am CST

Wednesday: Construction Spending - 9:00 am CST

Thursday: Weekly Jobless Claims - 7:30 am CST

Factory Orders - 9:00 am CST

ISM Non-Manufacturing Index - 9:00 am CST

EIA Gas Storage - 9:30 am CST

API/EIA Energy Stocks - 9:30 am CST

Friday: Monthly Unemployment - 7:30 am CST

Recent articles from this author

Sideways Actions Seen in Interest Rate Markets - Thursday, May 08, 2008
Consumer Confidence Declines, as Volatility Increases - Thursday, April 10, 2008
Growth and Inflation Battle Continues - Friday, February 29, 2008
Markets Continue Volatility Streak - Thursday, February 14, 2008
Jobs Growth a Primary Concern - Friday, January 18, 2008

About the author

My interest in the futures industry stems from strong family ties to production agriculture in Hereford, Texas. After completing a bachelor's degree in Agricultural Economics at Texas Tech University in 1995, I moved to Chicago to participate in the Chicago Mercantile Exchange Agricultural Broker Training Program. The program exposed me to all facets of the futures industry, enabling me to work with experienced floor traders and develop a strong understanding of the intricacies of trading in the futures markets.

Since completing the training program in 1995, I have continued to gain a well-rounded knowledge of the industry by working as an order clerk, trading desk manager, and broker for RJO Futures. In 2004, I started a branch office of RJO Futures to focus my efforts on helping clients meet their trading goals. By identifying client objectives, managing risk, and providing a carefully tailored service, I serve as a dedicated liaison on all trading floors to full-service, broker assist, and on-line clients. My commentary can also be heard regularly on CNBC TV and Bloomberg.

In order to continue to better serve my customers in an ever-evolving and dynamic industry, I also completed a M.S. degree in Financial Markets and Trading from the Illinois Institute of Technology in May of 1999.

RJO Futures is the retail division of R.J. O'Brien, one of the oldest FCMs tracing its history back to 1914.

To learn more about RJO Futures, visit rjofutures.com

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