wmeubank@ocp.kcmo.com
TRIESTER ON THE MARKETS-OSPREY TRADING
111 Presidential Blvd., Ste 230,
Bala Cynwyd PA
(June 13, 1997) INTEREST RATES: The bond market rallied up to the 112-03 on good inflation and retail sales news. The numbers tell us the trend is now sideways. The market is range trading for now as Fed action is uncertain. The close tonight was 112-03, 4.5 points off the recent highs of 116-16. The rally up has halted and a two- day move above 111-02 did cause a rise to 112-04. The intermediate- term trend is now neutral. The economic numbers have been weak causing bond rallies. They have showed a bit of improvement. We see a long-bond yield in the area of 6.7% at present. The FOMC talks produced nothing this month, Rubin has hurt the dollar, but this has pushed down the bonds in a nice panic. Some locals have crashed and burned buying the dips before this and paid the price with large losses. The Osprey Intermediate-Term model is slightly positive here since 111-02 was exceeded on a two-day close basis. Most fundamentals point to higher bonds due to a weak economy and Fed inaction. The long trend shifts to side as June continues with non-farm payroll/unemployment data on Friday. This interest rate buy can be a real winner over the next three weeks. The Eurodollars are now in an up trend with a close of 94.185 in June Euros. A close above 94.10 did turn the short-term positive and give a buy signal for the June Eurodollars. The market remains higher this week as well. This is turning into a better trading month as directionality becomes expanded in June 1997. The players have been rewarded if they were long in the recent rise of 3.0 points. We got our rally off lows to 112-04 this week. This exceeded our high of 111-22 statistical target from the model. The Osprey Model tells us that the bond bulls may ride again. The trend is now sideways and not down. The press tells us that the Fed continues to favor tightening to keep their posture on place. The dollar has lost a lot against the Japanese Yen, less from Swiss Franc and Deutschemark and British Pound. This is no accident as a weaker dollar attracts higher yields in fixed income. The yield curve is interesting and some have benefitted by the move up in long term versus short-term rates. The Municipal bonds are keeping ahead of Treasuries. We look for more volatility on the upside with a new intermediate rally until July 1. Look for some long-term cycles to bottom then and the seasonal to bottom out. The price ranges expected are 111-02 high and 106-10 low. Have a good trading week. June Treasury Bonds--Position: Close 112.03 up 25 ticks. June Eurodollars--Position: Close 94.24 up 5.5.
David E. Triester
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