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Jobs fall flat, Bond futures roar

September 2, 2011


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Jobs fall flat, Bond futures roar


We had a feeling that last week's consolidation was simply the calm before the storm, and it seems that is exactly the case.  Sir Isaac Newton once said, "I can calculate the movement of stars but not the madness of men" and I think this applies to the current market conditions.  Fundamentals are irrelevant and emotions are running rampant. With that in mind, our gut tells us a retest of the all-time high in bond futures could be in the cards.  (Yes, we realize we've been looking for this to happen for quite some time and the market miraculously slowed its pace...but the time could be near). 


You've likely read by now that the latest government employment report was a disgrace.  Luckily, we didn't lose jobs last month...but we did the next to worse thing by coming up with a goose egg.  This was the first time since 1945 that the U.S. economy didn't either make or lose jobs in a month's time.  That said, we should be grateful we aren't seeing the several hundred thousand draws we were getting about three years ago. 


You might have noticed that the long bond rally far-outpaced that of other maturities along the Treasury curve.  The market has nearly forgotten about the traditional Quantitative easing program and is now focused on the idea of what is being dubbed "Operation Twist".  Speculation suggests at least some expectation of a yield curve play by the Fed to keep long-term rates low.  This is in opposition to QEI and QEII that involved the purchase of short-term maturities alongside longer-dated securities.  In other words, they could be working toward flattening the yield curve to keep rates low for long-term borrowers such as home buyers.  Critics claim this will continue to put banks in a compromising situation and do more harm than good. 


Resistance on the way up will be 141'09, then the obvious 142 and 143 area.  Support lies at 138'05 and 136'12. 


* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data.  However, market analysis and commentary does.  


**Seasonality is already factored into current prices, any references to such does not indicate future market action.


Treasury Bond and Note Option and Futures Trading Recommendations

**There is unlimited risk in naked option selling.


September 2 - Clients were recommended to sell the November bond 151 call for about 27 ticks


In other markets....


8-26- Clients were advised to sell October corn 820 calls for about 9 cents.
9-1 - Clients were instructed to take a quick profit, fills were reported near 3'6 to lock in a profit of about $263.50 before commission and assuming an entry of 9 cents.


(Our clients receive short option trading ideas in other markets such as gold, crude oil, corn, soybeans, Euro, Yen, and more.  Email us for more information)



Carley Garner

Senior Analyst / Commodity Broker

DeCarley Trading


Local : 702-947-0701

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*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.


There is substantial risk of loss in trading futures and options.


Past performance is not indicative of future results.  The information and data in this report were obtained from sources considered reliable.  Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.