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Credit Market Quarterly Outlook

Recommended Trading Tool: E-Futures Chart Patterns

Economic Reports and Expiration Notices

October 22nd, 2008 - Issue #451

Credit Market Quarterly Outlook

brought to you by MF Global Research

Special Quarterly Outlook: Overview

TYZ8 is a trading affair with an upside bias. The market is expected to be supported by weak global economic growth and falling inflationary pressures. Yesterday, Caterpillar expected slower global growth into 2009 echoing comments made by Eaton Monday. Falling gasoline prices and looser credit conditions could revive the global economy, but have not yet impacted economic activity. Likewise, Texas Instruments noted that semiconductor demand was seasonally weak. Stress in the developed world lingers. Poor valuation and supply are likely to limit gains. Price ideas include:

• TYZ8 will find stiff resistance in the 114-16/20 area. Above 114-20, prices could run to 116-16. The 113-10 to 112-15 area is support. This level should be a base.
• The 2/10 spread is going through a correction. It will remain steep over time and likely widen out to 250 in 2009. It is subject to narrowing the next few days, but is likely to widen out as the refinance approaches in early November. 208 and 200 bps are support. Resistance is at 224 bps and 238 bps.
• EDU9 is expected to work toward 98.00 in the coming months. Like EDU9 to TUZ8.
• Look for the U.S. 2 year yield to rise more or fall less than the EZ 2 year yield. Support is at -136 bps/-140 bps and -152 bps. Resistance is at -110 bps and -100 bps.

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Report includes analysis of the mortgage industry, 10-year bonds, and more.

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Disclaimer:

Trading commodity futures and options involves substantial risk of loss. The recommendations contained in this letter is of opinion only and does not guarantee any profits. These are risky markets and only risk capital should be used. Past performances are not necessarily indicative of future results. This is not a solicitation of any order to buy or sell, but a current futures market view provided by Cannon Trading Inc. Any statement of facts herein contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgment in trading!

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Broadening Tops
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Economic Reports and Expiration Notices

Source: Moore Research Center, Inc.

* Please note that the information contained in this letter is intended for clients, prospective clients, and audiences who have a basic understanding, familiarity, and interest in the futures markets.

** The material contained in this letter is of opinion only and does not guarantee any profits. These are risky markets and only risk capital should be used. Past performances are not necessarily indicative of future results.

*** This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts herein contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgment in trading!