On March 18, the Federal Reserve announced a plan to purchase up to $300 billion longer-term Treasury securities over the following six months. There was an initial spike after the announcement but 30-year U.S. Treasury Bond futures have gone down since then.
“We’ve had a significant pullback from last year’s run up. We’ll have to retrace a bit, maybe back up to 123-15,” says Alaron broker Richard Roscelli. “We’re heading down and by mid-June we could hit 117-28. The Fed’s viewing it as a good thing in terms of the depth that they’re buying. They’re essentially dollar cost averaging in terms of the buy that they’re doing,” he says.
Larry Levin, president of Secrets of Traders, says the biggest level people are watching is 125. “If people were looking for a place to short the bonds or to break out back to the upside, that would be the level,” he says. “If we were to continue lower, we could test 110. We had some congestion back in late 2008 and if we stay below 125, [we could] go down to 110 in the bonds and find some support levels down there,” adds Levin. He says that there was good volume at the 110 level, and expects that to be important if the market retests that level.