Short US Bonds Trend Building?

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 A 0.1 percent increase in U.S. retail sales followed a 0.5 percent decline in March, Commerce Department figures showed today in Washington. The markets are continuing their trends from last week, namely strong stocks, weak bonds, and strong US dollar.

Equities: The JUN13 emini SP 500 is hanging close to its recent high of 1631, trading down very slightly to  1628. We believe this market still has a very bullish tone, and would not be surprised to see it aim towards our next target of 1640. Especially with an upside surprise in today’s retail sales number, we believe a true correction may not happen until the market sees much higher levels. We believe a trade above 3000 for the Nasdaq is imminent. This has not happened yet this year. We also focus on the Nikkei. The Nikkei has had a truly blistering run over the past 6 months, ever since talk of the massive BOJ stimulus got around the markets. Today, we sit less than 200 points away from 15,000, which we believe will be hit very soon. Short term, the Nikkei may be due for a short term correction, but overall we believe investors will continue to buy the Nikkei mainly due to the massive BOJ stimulus policies.

Bonds: The US bond market has really started to show some interesting behavior, with the US 30yr continuing its slide from last week this morning. The JUN13 US 30yr bond is down below 145 to 144’22, and we believe this market could head much lower throughout the remainder of this year. We also watch the Eurodollar futures consistently, and believe that these contracts are also highly susceptible to downward price movement. We anticipate a trend towards a short US bonds idea building.

Commodities: Corn is up the most out of any commodity today, with the active month trading up $.19 to $6.55. Our grain market analyst mentions this jump in price was due to corn planting delays, with weather being cold and wet and farmers having trouble getting into the fields. We also notice crude oil down over $1 this morning, and still expect crude to head down to $92, if not lower due to a large supply situation combined with a strong US dollar, also combined with a fear of slower Chinese growth.

Currencies: The Yen and the Aussie dollar are really the main FX stories right now. The Yen is below 100 and not finding strong buying interest even at these levels. Today the Yen is trading down 30 ticks to 98.20. We expect the Yen to head lower from here. The Aussie dollar is also holding steady below 100, trading down 56 ticks to 99.29. Our initial key price level of 99.75 has been hit. This may seem far away, but our next major technical downside level for the Aussie is 96. We think the Aussie does have a chance of selling off to this key chart level this year.