Making sense of the bond rip and defining $ES F levels into NFP
THE UK IS OPEN AND EQUITIES ARE UP SLIGHTLY, BUT MOST MARKETS ARE CLOSED… GREECE SEEMS TO BE BETTER IN PERIPHERAL LAND…..WE EXPECT THE MARKET WHISPER NUMBERS FOR NON FARM TO DICTATE THE LATE AFTERNOON TRADING… YESTERDAY…. WE WERE A BIT SURPRISED BY THE BOND PRICE ACTION YESTERDAY. WE READ THE FED TEA LEAVES AS SAYING THE ECONOMY IS GETTING BETTER AND THE TAPERING WILL CONTINUE…THE ECONOMIC NUMBERS FORWARD LOOKING ARE STRONG…WE THINK TOMORROW’S NUMBERS WILL BE ON THE HIGH SIDE….MANY INVESTORS WERE ON THE SIDE LINES YESTERDAY WAITING FOR THE MARKETS TO BACK OFF TO BUY…THEY WERE DISAPPOINTED…BETWEEN MONTH END INDEX BUYING AND SHORT COVERING, BOND MARKETS RALLIED… WHILE THE FED IS CUTTING BACK, BANKS ARE BEING FORCED TO BUY TREASURIES AS LOAN DEMAND CONTINUES TO LAG DEPOSIT GROWTH… REUTERS HAS AN ARTICLE SAYING THAT THE FED’S 45 BILLION IS 20 BILLION TREASURIES AND 25 BILLION MORTGAGES…WE THINK THAT IS WRONG – with attribution to Andy Brenner RBC.
Snippets: After reading today’s recap, focus on tomorrow’s jobs data and how you may react to the news. Then, do yourself a solid – and consider, now really consider, joining the next MrTopStep Boot Camp – worst case scenario is – it’s not for you. However, what if it is?
Parker what do you make of the bond rip? From what i understand, theres a lack of supply of new paper driving up the securitized markets, combined with chase for yield and growth slowing and you get the bond rally we’ve been having - theres also convexity to bonds prices at low yields which causes asymmetry, better to be long. 30s havent been able to get thru the 20 dma since end of march – been chopping btwn 20dma and 2% bollinger band. I think the jobs number will be fine Danny, what happens after that is anyone’s guess – parker_schwartz.
Eventually, you almost always go as far in the opposite direction from the Yell – so would be shocked not to print 1866.25 SOMETIME in the not too distant future = todays high 1880.50 +7 from 1873.25 THE NEW YELL 4-30-14 FOMC = last price trading on the FOMC / Yellen announcement. Eventually targeting down 7 to Yellen 1st presser 3-19-14 THE YELL 1866.25 – william_blount.
[DJT] humming along … Total US rail traffic +8.2% vs +6.3% last week, up 35 of past 40 weeks. Carloads +9.5% vs +5.1%, up 9 of past 10 weeks.
17 Facts To Show To Anyone That Still Believes That The U.S. Economy Is Just Fine http://bit.ly/1jjCGHO
Today started with a holiday low volume of 66k ESM traded on Globex, trading range was 1876.25 – 1880.50. Yesterday’s regular trading hours (RTH’s), pit session trading range was 1880.20 – 1867.00 before settling at 1877.90 up 6.1 handles. George_Drakopoulos (07:05) morning all! today is mkt holiday on most of Europe, London open tho. Chance (07:32) “Remember, if the S&P is going up, it will be from a selloff or pullback. You can take it from there” >>Exactly … still see lots of folks fighting this and seeing every pullback as a major reversal or something. william_blount (08:12) let me make it ez for ya — we top between friday and 1 week from monday and new line in sand is 1844.5 OR we dont top until either … appx june 20th or July 7thish. Sam_Easley (08:13) basket algo up 10% overnight look for reversal or chop.
Today’s RTH’s, pit session opened 1.4 handles lower to 1876.50 – 1877.00 and the first half hour trading range the same as first 15 mins, 1879.50 / 1874.50 area. william_blount (8:46) if dork crosses over its 50 ma and kicks in –ooh la la. Chance (08:50) [IWM] really lagging – ES buyers still in control above 1872-74. Chicagostock (08:52) equities have no true buyers, money is flowing into bonds. mts2 (08:55) top of the hour – ISM Manufacturing PMI exp 54.3 – checked in at 54.9. George_Drakopoulos lower prices paid = rates lower for longer … construction spending growth biggest miss in 12 months. william_blount (09:00) find the a.m. low and be wary of a HOW DEEP IS YOUR 3 – spill up was residual as we did not take out the last hour high yesterday. Derrick_Caravan (09:08) anyone still in [NDX]? ripping again without me … Chance (09:31) [IWM] led the downside today. IF you have the chart up – where did buyers step in yesterday and squeeze shorts? 1109…today’s low. Big clue for this bounce. Chance (09:36) Look at the imbalances on the chart and put a stop where it doesn’t make sense to be long anymore … for bulls to maintain control…shouldn’t trade below 1873.75. william_blount (9:43) 1870.25 post announce low was NOISE–was the mid pm low assignment yesterday — the LOC low was 1871.75 — any questions about today’s low thus far? william_blount (9:39) the dork now head bumping its 50 ma. william_blount (9:43) we are headed to 1882.5 spot today if normal; or higher. Well, going into the holiday reduced European close a new intraday high of 1882.50 traded and the lunch(s) sideways to slightly lower trade set in. stephen (10:39) 1882 bingo WB. Chance (10:39) sold 1882.5.
Growing chatter about the advance in the treasuries weigh on the equities from to time as [DJIA] hit all-time record yesterday with the [NDX] running in the green for the third day in a row after those momo stocks took an earlier toll on that index. william_blount (12:18) this down move today is due to NAZ 50 ma daily == rejected 14 handle divergence at p1 3 handle at 1474 vs 1471` so possible — but not the odds quite yet any price acceptance above 1881.25 = bears in trouble -- deep mid p.m. low possible — i was hoping for that on an how deep is your low move — ie. deep on the a.m. low and late — no cigar. aberrant would be a mid p.m. low below the a.m. low. BEARS aint done squat til 1844.5 DIES. Raphael- (13:05) NFP carbon copy possibility ? if you are looking for big game — the 220-224 handle decline variety.
Well, can someone tell me the midday low? … that 1873.50 area was retested and held again at 1:47. The MrTopStep imbalance Meter, MiM, showed a modest buy imbalance of $190M going into the cash close. The futures were trading 1877.40 area on the cash close before settling at 1877.70, down 0.2 handles on the day. E-mini volume on the day was 928k with the VIX going out at 13.25, down 16 ticks on the day.
Eco calendar: http://www.investing.com/economic-calendar/ BLS jobs data – 1892.50 traded last NFP.
Comments/Previously posted: Nonfarm payrolls are forecast to rise by 220,000 in April after a modestly weaker-than-expected 192,000 increase in the previous month. The unemployment rate is expected to decline to 6.6% after holding steady at 6.7% in March on proportional gains in household employment and unemployment. Hourly earnings are forecast to rise 0.2% in April after holding steady in March, while the average workweek is expected to stay at 34.5 hours after a sharp rebound in March. Nonfarm Payrolls for April (change in thousands) Friday, May 2 at 8:30 a.m.ET.
Median Range Responses Apr14 Mar14 Feb14
Payrolls +220k +180k to +250k 16 – +192k +197k
Private Jobs +210k +180k to +250k 12 – +192k +188k
Jobless Rate 6.6% 6.6% to 6.6% 15 – 6.7% 6.7%
Hrly Earnings +0.2% Flat to +0.3% 13 – Flat +0.4%
Avg Wkly Hrs 34.5 34.4 to 34.5 9 – 34.5 34.3
What happened last 2 NFP #s? Will be interesting to see if people want to be long again into the next number. So maybe a front run of sellers into next friday, then instead of peak high we get a peak low – Chicagostock.
‘Tiptoeing’ past today’s Fed statement: Art Cashin of UBS Financial Services tells CNBC’s Bob Pisani why the June Federal Reserve meeting could see some real “action.”http://www.cnbc.com/id/101629269