T-Bond trading comment (September 07, 2007)

With today's NFP, we confirmed the bullish scenario for September with a 1+$ jump. We opened this morning with a slight upward pressure after holding the 112 support line yesterday. Liquidity was non-existant until 8h31 as the market was waiting for the NFP. Just before the NFP, the market got lifted for a couple of hundreds. Right after the number came out at -4 k. Instantly, we were almost a buck higher. Peoples with an explosion position waiting in their tradebook were rewarded. With the market pricing a rate cut for September 18th, we climbed higher & higher for the rest of the day.

Speaking of the Fed, if they cut the rates at their next meeting, they will be the only ones to do so. BoC, BOE and ECB all stayed put when their turn came by.

The market may be getting a bit ahead of himself right now. Why? If we dig a bit in today's number, you will notice that the major (if not almost all) part of the loss came from the teenager segment. The most probable hypothesis to explain that is not massive firing of incompetent youth ( we would have heard of it) but simply normal blokes heading back to school spend their hard earned summer bucks. If this turns out to be true, the market could come back in the next weeks.

In that line of thoughts, for the ones of you who bought iron butterflies at the beginning of the month should maybe looking at selling their 112 october call. Why? Do your own homework!

Good week-end