SubscribeDaily Futures Commentary May 18, 2009
Monday, May 18, 2009
Treasury markets are trading flat-to-higher overnight as investors cannot seem to decide how they feel about risk. The initial reaction was to the upside following the open last night as traders added to last week’s gains. A weaker stock market was encouraging some flight-to-safety buying, but the majority was most likely short-covering ahead of today’s Federal Reserve purchase of 10-year notes.
After last week’s gains traders are hoping for a follow-through rally to the upside as the Fed is scheduled to buy Treasuries on both May 20 and May 21. Gains may be accelerated if U.S. economic reports continue to suggest more weakness in the economy and a slower recovery.
Investors are having a hard time deciding how aggressive to get at current price levels in the June Treasury Bonds and June Treasury Notes. Most are contemplating whether these two Treasury markets are rallying because the next auctions are not expected for two weeks or because of expected weakness in the economy. At times last week, it appeared money was shifting out of equities and into financials, but early this morning the opposite seems to be taking place.
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