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DJ Debt Futures Review: Short Covering After Friday's Lows Hold
By Allen Sykora
BEND, Ore. (Dow Jones)--Short covering in the wake of Friday's sell-off
enabled interest-rate futures in Chicago to settle with gains on Tuesday.
Analysts linked the move largely to technical considerations on a day when
there were no major U.S. government economic reports.
Volume remains light, as was the case ahead of the Labor Day weekend,
market watchers reported.
Dec 10-year notes settled up 9.5 ticks at 111-18.5, Dec Treasury bonds
finished 21 ticks higher at 110-09, and Mar Eurodollars added 1 basis point to
97.395.
"It's essentially short covering from last week," said Beth Malloy, bond-
market analyst in Chicago with Briefing.com.
"We've been higher all day," said Frank Lesh, futures analyst in Chicago
with Rand Financial Services. "When you look at it, it's technical in nature."
Specifically, the market bounced after holding the lows set after Friday's
144,00 rise in August non-farm payrolls. Sep 10-year notes got no lower than
111-06 overnight and 111-07.5 in the open-outcry session, compared to Friday's
low of 111-02.5.
"We couldn't take them out," said Lesh of Friday's lows. "When you don't
get follow-through to the downside, then there is short covering."
Malloy noted some buying might have been spurred over news reports that
two women with an Italian aid organization were kidnapped from their Baghdad
office. Also, she said, some buying might be the result of rate-lock unwinding
related to corporate deals.
Lesh suggested some support might have come about when traders began
rethinking last week's economic data, resulting in speculation on what Federal
Reserve Chairman Alan Greenspan might say Wednesday. He is to appear before
the U.S. House budget panel to address the economic outlook and fiscal issues
Wednesday morning, with his testimony is scheduled to begin at 0930 CT (1430
GMT).
While Friday's data showed improvement in the labor market, most other
major reports last week fell short of forecasts, including consumer
confidence, the Chicago Purchasing Managers Index and weekly jobless claims.
Greenspan may well be the main focus for the market this week until the
Producer Price Index report on Friday, added Lesh.
The Rand analyst put support for Dec 10-year notes around 111-02, 110-17
and 109-25. Resistance was pegged at 112-03 and 112-18.
In Dec Treasury bonds, he put support at Friday's low of 109-05, 108-16
and 107-12. Resistance was listed at 110-20 and 111-13.
In Mar Eurodollars, support was put around 97.37, then Friday's 97.33 low
and 97.28. Resistance was pegged at 97.45, 97.49 and 97.55.
On Wednesday, the Federal Reserve is scheduled to issue its Beige Book
report at 1300 CT (1800 GMT). Also, a five-year note auction is also on the
agenda for Wednesday.
-By Allen Sykora; Dow Jones Newswires; 541-318-8765;
[email protected]
(END) Dow Jones Newswires
By Allen Sykora
BEND, Ore. (Dow Jones)--Short covering in the wake of Friday's sell-off
enabled interest-rate futures in Chicago to settle with gains on Tuesday.
Analysts linked the move largely to technical considerations on a day when
there were no major U.S. government economic reports.
Volume remains light, as was the case ahead of the Labor Day weekend,
market watchers reported.
Dec 10-year notes settled up 9.5 ticks at 111-18.5, Dec Treasury bonds
finished 21 ticks higher at 110-09, and Mar Eurodollars added 1 basis point to
97.395.
"It's essentially short covering from last week," said Beth Malloy, bond-
market analyst in Chicago with Briefing.com.
"We've been higher all day," said Frank Lesh, futures analyst in Chicago
with Rand Financial Services. "When you look at it, it's technical in nature."
Specifically, the market bounced after holding the lows set after Friday's
144,00 rise in August non-farm payrolls. Sep 10-year notes got no lower than
111-06 overnight and 111-07.5 in the open-outcry session, compared to Friday's
low of 111-02.5.
"We couldn't take them out," said Lesh of Friday's lows. "When you don't
get follow-through to the downside, then there is short covering."
Malloy noted some buying might have been spurred over news reports that
two women with an Italian aid organization were kidnapped from their Baghdad
office. Also, she said, some buying might be the result of rate-lock unwinding
related to corporate deals.
Lesh suggested some support might have come about when traders began
rethinking last week's economic data, resulting in speculation on what Federal
Reserve Chairman Alan Greenspan might say Wednesday. He is to appear before
the U.S. House budget panel to address the economic outlook and fiscal issues
Wednesday morning, with his testimony is scheduled to begin at 0930 CT (1430
GMT).
While Friday's data showed improvement in the labor market, most other
major reports last week fell short of forecasts, including consumer
confidence, the Chicago Purchasing Managers Index and weekly jobless claims.
Greenspan may well be the main focus for the market this week until the
Producer Price Index report on Friday, added Lesh.
The Rand analyst put support for Dec 10-year notes around 111-02, 110-17
and 109-25. Resistance was pegged at 112-03 and 112-18.
In Dec Treasury bonds, he put support at Friday's low of 109-05, 108-16
and 107-12. Resistance was listed at 110-20 and 111-13.
In Mar Eurodollars, support was put around 97.37, then Friday's 97.33 low
and 97.28. Resistance was pegged at 97.45, 97.49 and 97.55.
On Wednesday, the Federal Reserve is scheduled to issue its Beige Book
report at 1300 CT (1800 GMT). Also, a five-year note auction is also on the
agenda for Wednesday.
-By Allen Sykora; Dow Jones Newswires; 541-318-8765;
[email protected]
(END) Dow Jones Newswires
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