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DJ Debt Futures Slide As Market Participants Move Back Into Stocks
By Allen Sykora
BEND, Ore. (Dow Jones)--A stronger tone in stock-index futures has put
the interest-rate futures in Chicago on the defensive first thing Wednesday
morning. There are no major economic reports to drive the price action.
At 0751 CT(1251 GMT), Dec 10-year notes were down 8.5 ticks at 112-18, Dec
Treasury bonds were down 12 ticks at 112-03, and Mar Eurodollars were down 3
basis points at 97.49.
In screen trading ahead of the pit open, the Dec S&P 500 was up by 4.60
points and the Nasdaq was up by 14 points.
"The bond market is seeing a lightening of positions this week due to the
fact we have some economic numbers (later in the week)," said John Person,
head financial analyst in Chicago with Infinity Brokerage Services. A slew of
reports are on the calendar for Thursday and Friday, including weekly jobless
claims, the trade balance, Producer Price Index, industrial production, retail
sales and the Empire State manufacturing survey.
"More importantly, the flight to quality people were looking at with
fixed income may be starting to dissipate as people see yesterday's Intel and
Yahoo reports, and this morning's McDonald's numbers," said Person. "We're
seeing a good performance from different sectors of the economy. So the bond
market is a little leery and is giving up some of its (recent) gains.
"We're seeing a shift from fixed income and a trickle back into equities."
A pullback in oil prices may also be helping undercut the debt market,
since higher oil had been supporting bonds on ideas that soaring energy costs
could slow economic momentum, added Person. Nov crude, which on Tuesday had
gotten as high as $54.45, is down 90 cents for the morning to $51.61 in early
screen trading Wednesday.
Dec bonds have bottomed at 112-02 so far Wednesday morning, matching
Tuesday's low. A break of this general area would leave the next major
downside objective around 111-16, said Person.
Based on pivot-point analysis, he put support for the week at 111-04 and
resistance at 112-25. Support for the week in the Dec 10-year notes is
expected at 111-29 and resistance at 112-31.
-By Allen Sykora; Dow Jones Newswires; 541-318-8765;
[email protected]