Treasury bears recovering from hibernation

Ten-year Treasury note futures volume spikes as the contract fell for a second session. Overnight gains following surprisingly low China PMI were relinquished earlier today amongst mixed domestic data.

Bullish minded speculators, comforted by recently weaker economic data that has fallen off the Q3-Q4 pace have been inclined to believe the Fed will reduce or eliminate the tapering of securities.  The last two weeks has allowed only consolidation near recent highs, despite a weaker economic data glut. The lack of progress in the bullish advance should be expected to soften the resolve of this group.

 

 A lower settlement today would help to confirm the bearish implications of yesterday’s ‘bearish shooting star’.  A settle below support at 125-14 would further encourage the bearish contingency.  Finally, a settle below the Feb. 12 low of 125-08 would be additionally encouraging as this would more firmly set the stage for a retest of 3%+ yield equivalent 123-00ish.

It has been a relatively quiet two weeks caped by extreme weather and the chill of unsubstantiated progress toward Fed mandated goals.  Today brings severe rains to the Midwest, but for some it is at least not snow.

About the Author

Martin McGuire, managing director at TJM Institutional Services

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