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Futures Are Higher Despite Troubling Warnings

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Equity futures are higher this morning across the board this morning and the opening for the markets looks promising. S&P Futures are higher by 5.00 points, NASDAQ futures are up 42.50 and Dow Futures are up by 35.00. Fair Value on the SPX is set at $11.81, With buy programs are set at $14.09 and program selling set at $9.23.

Bonds Lower Across the Board

US Producer Prices showed little change in December as declining food, gasoline and oil costs outweighed soaring costs for natural gas. The PPI data for December showed no change from the previous month when the index rose 0.1%. The core index, which excludes the volatile food and energy components rose a larger than expected 0.3%.

In a separate report, The Commerce Department reported that retail sales rose an unexpectedly 0.1 percent after falling 0.2 percent in November. Car dealers, clothiers, and groceries added to the gains. The index was unchanged ex. Autos.

Cash bonds were taking the report badly this morning as selling was in force in the pits. The benchmark 10-year note was lower by 22/32 priced at 104-04 to yield 5.20%. The 5-year note was lower by 18/32's to 103-16 and the 2 year was off by 8/32 yielding 4.85%

We alerted traders to potential higher prices in the pre-market report yesterday morning that should the 30-year treasury yield trade north of 5.55%, equities could benefit. As you can clearly see, we are seeing yields north of that level this morning!

30-year Treasury Bond Yield Chart - 60-minute Interval.

Watch Technology and the SOX in General

It will be interesting to see how the SOX index holds up in spite HP's warning (HWP) and Gateway's (GTW) horrible 25-cent earnings miss late yesterday. Rambus may also be a factor as the company missed estimates by a penny.

Trade Smart Today!

Derek E. Baltimore
Staff Editor

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