T-Bond trading comment (July 16, 2007)

Another hard day for trend followers where the early players ( pre-11 AM) got killed trying to find a trend. Even with the drop in prices paid we saw in the Empire Manufacturing (down to 34.5 from 42.5), we did not see the market start to trend before the end of the morning. The market did a triple bottom before booming higher on fear of subprime meltdown, possible miscalculation in the number of jobs lost in contruction, etc... On the other hand, people who were only there to nibble the market by 1 or 2 ticks by trade, should have done okay today.

Tomorrow, we are starting the inflation dance with PPI numbers. The markets expects lower PPI numbers but stable Core PPI. Also we will have TIC flows as well as Industrial Production and Capacity Utilization. To top off the day, at 1 PM the NAHB is coming out. Will we print a new multi-year low ? Expectation are for a +27. Not seen since February 1991...