Fixed income traders have benefited from keeping an eye on crude oil these last months and this has not changed recently. On Tuesday, I forwarded the note below indicating that the front contract was nearing a channel trend line support.
Technical indicators should take a back seat when fundamental data changes. Today’s data indicates that retail sales has not met growth expectations even when adjusting for lower oil and gasoline prices. The New York Empire report was very weak as well giving rise to additional concerns for the manufacturing base.
For those keeping an eye on the Bund, we note some bearish price action that may result in still lower levels. There was a bearish reverse over the three session period ending Dec. 22 that appears as if it will be confirmed with a lower settle today. This price action is consistent with that seen back in late October when the contract fell 4 points.