Home > Uncategorized > Brief Update: 2010/03/15: Fixed Income Seems to Have It Right as Equities Wobble After Friday’s New Highs

Brief Update: 2010/03/15: Fixed Income Seems to Have It Right as Equities Wobble After Friday’s New Highs

▪ On one hand, a new high by eight bucks in the September S&P 500 future is nothing to sneeze at. On the other hand, in the scope of the major rally since the March 2009 low or even the early February selloff, it’s fairly minor. In fact, even a push to the lead contract Objective in the 1,166 area would need to be considered a fairly contained extension. What’s the point of all that? Quite simply that (as we suspected might be the case) the other asset classes are not experiencing the sort of direct or counterpoint reactions which might have been anticipated under normal circumstances; which is to say the expectation of extensive, sustained economic strength as the rationale behind the equities rally. 

▪  And in spite of the fact it has been quite a bit more grudging than might have been expected, that will likely continue to provide the intermarket asset class influences over the short- to intermediate-term; including some pressure on the govvies and US dollar, while providing support to the April Crude Oil that stalled as expected into its broad 82.20-83.50 resistance range and April Gold continuing to languish near 1,100-1,090 area. In fact, all of our technical trend perspectives and background economic assumptions remain pretty much the same as in last Friday’s TrendView GENERAL UPDATE.  Which is quite important right now because in spite of the degree to which govvies have weakened since the US Employment report they remain quite resilient, as evidenced by their recent relatively stable activity. That includes the June Bund future rebounding strongly from its 122.00-121.70 support, while June T-note could not even trade down to its 116-00/115-16 area support…

▪  Similarly in the foreign exchange market, while the equities bid is seeming to assist weak sisters Euro and British pound, there is a distinct lack of what should have been impressive upside follow-through in Canadian and Australian ‘commodity’ currencies.  Confident perceptions that equities strength was more than further risk asset reflation on the back of free money (especially in the US and UK) or late-quarter equities portfolio manager window dressing should be driving that psychology.

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