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| The Bond Bulletin October 1st, 2008 |
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| Written by Carley Garner |
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October 1st, 2008
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Awaiting Senate vote tonight and Congress later in the week...For the third consecutive day in a row, Bond traders are suffering from whiplash and mass confusion. The 30 year bond futures is violently range-bound between 120 + and 117 making trading in this market relatively dangerous in my opinion. Volatile Treasury trade can be attributed to the dramatic rescue package saga and extremely mixed economic news. A typically unreliable ADP employment report predicts that Friday's government issued non-farm payroll data will show a draw of 8,000 jobs. This is much better than the previous reading of negative 53,000 and offers a hint of optimism going into the Friday's numbers. However, likely due to ADP's dismal record of accuracy the financial markets shrugged off the release. Pessimism over the economy soon flooded the bond and equity markets as the ISM Index was reported to be at a dismal 43.5. Most analysts were expecting a weak number, but they were looking closer to 49.5. Any number below 50 signals contraction, and this was well below the half-way mark. We have entered a seasonally bearish time of year for bonds, so each rally should be looked at as an opportunity for the bears. However, with event risk at a maximum I would prefer to hold out for much higher prices. In the long bond, this could mean 122, in the 10 year note I see the possibility of nearly 119. It seems a distant cry from current prices but anything is possible. On the contrary, I would be bullish the complex if prices dipped to what I considered attractive levels. Based on current valuations, the 30 year bond futures look to be promising just under 116 and the 10 year note futures just below 114.
Treasury Option Trading Recommendations**There is unlimited risk in naked option selling.
Flat Treasury Futures Trading Recommendations**There is unlimited risk in trading futures.
Flat Carley Garner Senior Analyst / Commodity Broker DeCarley Trading 1-866-790-TRADE Local : 702-947-0701 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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