Suddenly the safe-haven sentiment absent in Friday’s session was in control of Monday’s trade. Treasury bonds and notes recovered most of Friday’s dramatic losses as equities fell out of favor. The lack of economic news exaggerated the negative correlation between the asset classes, and we suspect that this could continue to be the case as the weak progresses. The only significant news to speak of is durable goods orders and home sales much later in the week. In the meantime, interest rate traders will be focused on stock earnings, specifically stock trade, for directional help.
The March index of Leading Indicators reportedly declined by .3% according to the Conference Board; this was the third consecutive monthly draw. While the news likely wasn’t a catalyst to the bond and note bid it likely defended the possibility of an intraday pullback. Accordingly interest rate products traded steadily higher throughout the day.
The recent dollar rally has managed to stay below the radar, but given the slow news week may be considered highly supportive by many Treasury traders. That said, the greenback may start to lose momentum as the dollar index futures look a bit overbought at current levels.
In Friday’s newsletter we stated:
I can’t help but feel as though the stock and bond markets are due for a reversal, if not intermediate-term at least temporary. With both markets trading near what seem to be relatively extreme pricing in regards to valuations thus far in 2009, we could see a much different picture at some point next week.
We are looking for a continuation of the upmove in the T-bond to 127’20 but don’t hold a strong opinion in either direction once this level is reached. Similarly, the 10-year note may continue higher to 123’20 but from there it will be a “wait and see” scenario.
We hope that you were able to participate in the traded recommended on Friday (below). Our clients were advised to exit the long 5-year note futures this morning at a profit, with aggressive traders looking for prices near 118’01 and conservative locking in profits just above 117’20. As far as the short bond 118 put goes, we will be looking to take a profit on this shortly.
Treasury Bond and Note Option Trading Recommendations
**There is unlimited risk in naked option selling.
April 17 – We recommended to sell the June Bond 118 puts near 20.
Treasury Bond and Note Futures Trading Recommendations
**There is unlimited risk in trading futures.
April 17 – We recommended to buy a 5-year note futures contract near 117’12.5
ยท April 20 – Our clients were recommended to take profits today at any point above 117’20 and at or near 118’01 for more aggressive traders. In this instance, aggression would have paid off.
Eurodollar Futures Trading Recommendations
**There is unlimited risk in trading futures.
Flat
Carley Garner
Senior Analyst / Commodity Broker
DeCarley Trading
cgarner@DeCarleyTrading.com
1-866-790-TRADE
Local : 702-947-0701
www.CarleyGarnerTrading.com
www.DeCarleyTrading.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.
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