To: $Mogul who wrote (130 ) 7/27/2001 3:59:08 PM From: $Mogul Read Replies (1) | Respond to It's been a consolidative week for the bond futures contract, even with major quarterly economic releases and an appearance by Alan Greenspan. On the one hand, continued weak economic data and the elusiveness of the rebound kept bond futures from moving through support at 102 24/32 on both Wednesday and Thursday. But many in the market continue to look toward an economic recovery and expect future Fed rate cuts to be limited, preventing the bond contract from moving above 103 30/32 as the 104 level looms. A move above 104 in the bond contract would represent a 61.8% retracement of the sell-off from March 22 to May 15, suggesting a reversal of that downtrend that market doesn't seem prepared to concede yet. The result was a range of just 1 6/32 for the week, the tightest weekly range since February and a little more than half the average weekly range seen so far this year. That came despite Greenspan's testimony, which held no surprises, and the quarterly GDP and ECI reports, which were also generally in line with expectations. The biggest question the market is facing is how the tax rebates will impact the economy. Any clear sign of a boost to spending could push Treasuries lower, but that likely won't be known for some time yet as the government just began mailing out rebates last week. Nearer-term, factors that might break the bond out of its range include a sharp move in stocks, an Argentine default, a surge in oil prices or a sharp drop in next week's NAPM index. Another possibility: a defeat of Japan's LDP in Sunday's election, leading to a sharp drop in the Nikkei.
