Daily Cash & Futures 2/12/19, Ian C. Burdette, CFA, CMT

* Risk ON! US equity futures ramping higher after solid overnight gains across virtually every major global market. WTI up almost 2% and Gold up 0.4%. Eminis up 19.75 handles at 2728 on 150k in volume and back above the 2700 optical level, 100d sma at 2702, the 61.8% Fib retracement (Sept ATH/Dec low) at 2711.50.. Next formidable resistance is the 200d sma at 2752.54 and then the 2800 zone (Oct/Nov/Dec triple top zone and 75% Fib retracement).
* UST futures down across the stack and testing levels just below first pivot support (see attached PDF for Pivots/ATRs). Bonds could not hold levels below 3% - last 3.0159% (US 145-31, cash 99-21+). Volumes good so far hitting 21% of 10d sma or ~$55mm an 01.
* The 'why' seems to be 1) a 'tentative' agreement on a spending bill that includes just $1.375bln for a measly 55 miles of boarder fencing {NSN PMT7FW6JIJUP <GO>}, 2) a conciliatory tone from Trump on a Xi meeting/call to further 'Tariff' talks {NSN PMT7FW6JIJUP <GO>}
* Meanwhile Primary dealer holdings of USTs hit a new all time record long. From yesterday I wrote the following:The latest report shows a new record long position in USTs for Primary Dealers. The period end date for this series of data is 1/30/19 - so does NOT include much of the most recent UST auctions. We won't see the full impact on dealer sheet of the quarterly refunding for a couple of weeks. Perhaps the skyrocketing of dealer sheet devoted to USTs has something to do w/ the Fed's 180 on balance sheet roll-off? Or is this significant increase 'transitory?' One thing seems certain per the CBO's latest 10yr forecast, deficit spending is not going to slow and 'debt held by public' is projected to increase by ~$12 trillion ($16.108tln last vs 2028 forecast $28.739tln, source: https://www.cbo.gov/system/files?file=2019-01/54918-Outlook.pdf ) . I wonder what dealer sheets will look like then!
Largest bucketed holdings as of 1/30/19:Notes <2yrs = $77.009bln (new record long)Notes >11yrs = $43.026bln (just off record long set 2wks ago at $48.004bln)

perspective 2.12.19.png

Ian C. Burdette, CFA, CMT
Senior Managing Director