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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: marcher who wrote (21576)	7/30/1999 4:25:00 PM
From: RJL	Respond to of 99985

I agree, but take a look at the Russell at the close. There was some nice dollars going into that one.

To: marcher who wrote (21576)	7/30/1999 8:13:00 PM
From: Les H	Respond to of 99985

US DEBT OPTIONS: VOL DOWN, OTM CALLS BOUGHT ON STOCK JITTERS 16:23 EDT 07/30, MarketNews Intl CHICAGO (MktNews) - Implied volatility on Sep T-bond options fell Friday, which gave some professional traders the opportunity to buy inexpensive out-of-the-money T-bond calls as protection against further equity market erosion, floor sources said. Implied volatility on the short-dated Sep T-bond options was down by .85% to 8.90%, falling below the one-month high established on June 29 at 9.00%. The backmonth Dec T-bond options edged higher for the third consecutive session to finish up .06% at 9.31%. Dec volatility remains firm as it will largely be effected by the results of next Federal Open Market committee meeting on August 24, option sources said. In contrast, the Sep contract declined as the underlying Sep T-bond futures failed to penetrate the one-month low established Thursday at 114 19/32. The benchmark contract was capped by 115 3/32 on the upside and 114 21/32 to the downside after it shrugged off the release of a higher-than-anticipated July Chicago purchasing managers index. The overall Mid-west business barometer rose to 60.5 from 60.0 in June. The emphasis was placed on prices paid, which was higher than expected at 59.8. Most traders interpreted the data as meaning higher interest rates, which pressured the U.S. equity market. Floor traders said it appears as though some retail accounts have a certain degree of "complacency," surrounding the recent stock market dip as they believe a recovery is near. This attitude among the smaller trader is making the "professional trader nervous," as they fear further declines, floor sources said. Sources said these professional accounts were among the first to step up to the plate Friday as they bought large blocks of out-of-the-money calls in the short-dated T-bond options. Pit sources reported one dealer bought 10,000 Sep T-bond 118 calls while a second bought 3,000 Sep T-bond 121 calls. Traders said although it is unlikely that the T-bond market will trade higher ahead of next Friday's payroll report and the August 24 FOMC, protection with long calls is prudent as they anticipate the "old-fashioned," stock-bond inverse relationship next month, they added. The Chicago Board of Trade estimated Friday's volume in T-bond futures at 202,000, down from Thursday's actual of 454,236. Bond options were estimated at 122,000, compared to 181,853 traded during the previous session.--Alyce Andres

To: marcher who wrote (21576)	7/30/1999 8:16:00 PM
From: Les H	Read Replies (3) \| Respond to of 99985

US TSY MKT VIEW: AUG RATE HIKE NEAR CERTAIN ON STRONG JOBS DATA 15:27 EDT 07/30 By Jill Bebar, MarketNews Intl NEW YORK (MktNews) - Economists and strategists see a high probability of another Fed tightening in late August, particularly if next week's employment report and National Association of Purchasing Managers' survey show signs of strength. "If next week's data is strong, it would clinch a rate hike on August 24," said Tony Crescenzi, senior market strategist at Miller Tabak Hirsch & Co. Analysts said Friday's July employment report will be the main focus as investors keep a close watch on tight labor markets. Fed Chairman Alan Greenspan said in his recent Humphrey-Hawkins testimony, the Fed "needs to continue to assess whether the existing degree of pressure" in the labor markets "is consistent with sustaining our low inflation environment." "The market is so sensitive to the Fed. The labor markets seem to be one of their trigger points right now," said Bill Hornbarger, fixed income strategist at A.G. Edwards. Analysts said the average hourly earnings component would be carefully scrutinized due to Greenspan's concerns on wage inflation. Employment is forecasted at 180,000 vs. 268,000 in June, according to a Market News survey. Nevertheless, Kevin Flanagan, economist at Morgan Stanley Dean Witter, said given what the market knows now, most of the bad news has already been priced into the market. "The data should not come in too threatening. We should be able to hold the levels we are at now." Flanagan expects the yield on the bellwether 30-year bond to trade in a range of 6.0% to 6.25%. The yield stood at 6.115% at 2:18 p.m. EDT. Monday's NAPM report will also be significant, according to analysts. Many fear the report will show strength similar to the Chicago PMI, which rose slightly to 60.5 in July vs. 60.0 in June. Crescenzi said that if Chicago purchasers "is mirrored" in the NAPM report, it would equate to about a 4.0% gross domestic product reading for the third quarter, suggesting continued strength in the economy. Supply from new corporate issuance may also pressure the market analysts said. A giant $5 billion Wal-Mart issuance in two-, five- and 10-year maturities was one of the deals expected to launch. And Wednesday will be the U.S. Treasury's refunding announcement of fives, 10s and bonds. Steve Wood, senior economist at Banc of America Securities, forecasted a refunding total amount of $37 billion. Analysts said market players will also eye U.S. car sales Monday and Tuesday. July sales are expected to be strong due to factory promotions and a strong economy.