T-Bond trading comment (September 06, 2007)

Yesterday, we put our bull hat and today we had our bear outfits.... Lately the market has been totally unsure of which way to go... We are oscillating between 110 and 112. Volatility buyers are bleeding while the sellers have been feasting for the past month. Even if the volatility has been huge on an intraday basis, we are not moving on a daily basis.

We opened the day virtually unchanged compared to the preceding close. After testing lows overnight, the market bounced up and actually looked like it was going to make new highs, but pretty soon it became clear that the 112-10/11 was going to contain at least for now bullish advances. At 8h30, we had claims, unit labor cost and productivity. The data was maybe a bit on the bullish side but after a small dip, we again tried to take out the preceding highs but failed. Market players though, if we can't go to the upside let's try the downside ! But bids were waiting in the corner and they came out at 112-01 and eventually moved to 03, 05 and 07. Again we failed to the upside and during lunch time, the formerly big bids were shot dead in seven minutes on 16k traded. After that the market died out and we broke the 112 line before coming back and hugging it for the end of day picture.

A point to keep in mind is that even if we have crossed to the upside the 112 line on the T-bond, the resistance area on the T-note hasn't been broken... Since both market are inter-related, we should keep a sharp eye on that. The resistance area is the 109-20/110-00 zone.

Tomorrow, we have NFP data!!! The ADP index was a bit low, but the correlation between both indexes has not been terrific up to date. All the economic numbers have been on the strong side lately, we will see if the trend continue tomorrow.