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Treasuries seem to be capped off just under last week’s highs on the charts, but we suspect that the market will garner some support off the 3 Year Note auction results at mid session today. However, while investors have shown the most interest in the shorter end of the yield curve in recent auctions, the heavy amount of supply lumped into first tranche of supply today could reduce the potential of a distinctly favorable result. With the Dow falling below the psychological 10,000 level yesterday and seemingly set to remain below that level into the opening this morning, we suspect that the action in the equity markets is generally destined to provide some minor indirect pressure to Treasury prices in the early going today. Yesterday a Fed member suggested that they might begin some asset sales in the 2nd half of 2010, but he also added that the Fed might not begin to tighten until after beginning the asset sales. Therefore, the Fed seems to have indicated that rates are likely to remain on hold through mid year.
With the economic report slate today somewhat thin (except for a Wholesale trade release) there shouldn’t be that much fresh news on the condition of the US economy. At least ahead of the auction, the March bonds look to have resistance up at 119-11, with similar early resistance in March Notes ahead of the auction seen at 118-23. Even though the Treasuries might show some initial weakness this morning we suspect that overall conditions are going to continue to favor the bull camp and that the auction results will add to the bullish tilt later on in the session. Apparently some early recovery bounce type action in US equities is applying some initial pressure to Treasury prices, but we would think that March bonds will find some buying interest around the 118-22 level, with a similar buying support level in March Notes seen around 118-11. In fact, despite the attempt to recover in the equity markets, the Press and trade still see to be fostering concerns toward EU debt. With a German CPI reading overnight actually posting a decline of 0.6%, it would certainly seem like economic activity in Germany remains suspect and that could indirectly provide a minor amount of support to US Treasuries.
Even if the US equity market action promotes bearishness toward Treasury prices early, we suspect that the trade will wait until after the results of the Treasury auction is known at mid session, before they make a definitive play.
Bond Market Commentary – 2010.02.09
by Dave Hightower on February 9, 2010
Below is a sample of our Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!
Treasuries seem to be capped off just under last week’s highs on the charts, but we suspect that the market will garner some support off the 3 Year Note auction results at mid session today. However, while investors have shown the most interest in the shorter end of the yield curve in recent auctions, the heavy amount of supply lumped into first tranche of supply today could reduce the potential of a distinctly favorable result. With the Dow falling below the psychological 10,000 level yesterday and seemingly set to remain below that level into the opening this morning, we suspect that the action in the equity markets is generally destined to provide some minor indirect pressure to Treasury prices in the early going today. Yesterday a Fed member suggested that they might begin some asset sales in the 2nd half of 2010, but he also added that the Fed might not begin to tighten until after beginning the asset sales. Therefore, the Fed seems to have indicated that rates are likely to remain on hold through mid year.
With the economic report slate today somewhat thin (except for a Wholesale trade release) there shouldn’t be that much fresh news on the condition of the US economy. At least ahead of the auction, the March bonds look to have resistance up at 119-11, with similar early resistance in March Notes ahead of the auction seen at 118-23. Even though the Treasuries might show some initial weakness this morning we suspect that overall conditions are going to continue to favor the bull camp and that the auction results will add to the bullish tilt later on in the session. Apparently some early recovery bounce type action in US equities is applying some initial pressure to Treasury prices, but we would think that March bonds will find some buying interest around the 118-22 level, with a similar buying support level in March Notes seen around 118-11. In fact, despite the attempt to recover in the equity markets, the Press and trade still see to be fostering concerns toward EU debt. With a German CPI reading overnight actually posting a decline of 0.6%, it would certainly seem like economic activity in Germany remains suspect and that could indirectly provide a minor amount of support to US Treasuries.
Even if the US equity market action promotes bearishness toward Treasury prices early, we suspect that the trade will wait until after the results of the Treasury auction is known at mid session, before they make a definitive play.
Tags: Bonds, Financials, Interest Rates, Notes
About Dave Hightower