Not surprisingly, US Treasuries are starting out under a bit of pressure today. In addition to a slight tamping down of euro zone debt concerns overnight, the markets have also seen a marginal improvement in overall global sentiment. While European and US equities started out on a positive footing earlier today, news of a surprising Indian interest rate cut might have added marginally to the positive vibe. It is also possible that events yesterday afternoon fully came together in favor of the bull camp and that Treasury prices became temporarily overbought and in need of some technical balancing. However, forward economic prospects generally remain suspect and some traders think that 10 Year Spanish debt auctions directly ahead will be a better test of demand for European sovereign debt demand, than the recently completed Spanish T-bill auctions. With US equities under noted pressure into the close Monday and the markets obviously disappointed with US housing news yesterday morning, concern toward the pace of the US recovery could be difficult to remove from the current marketplace. In fact, US scheduled data flow this morning looks to be mixed and potentially countervailing. In other words, US Housing Starts and Permits might see opposite results, while the same might be seen from industrial production and Capacity Utilization readings. In any regard, expectations for the sweep of US data today aren’t expected to impress traders and analysts. One could suggest that expectations for housing starts and permits were actually pulled down by yesterday’s readings and that could leave Industrial Production and Capacity Utilization readings as the real pivot point for the Treasury markets today. Despite a measure of initial economic confidence this morning, the fear of a slowing global economy generally seems to be a widely held view. However, there are some economists and analysts who think that Housing Permits might offer a surprisingly strong reading but the bear camp might need that type of result to add to the initial downward slide in Treasury prices today. While there will also be a series of critical corporate earnings reports out today, many of those reports will come after the close.
Technical Analysis
BONDS (JUN): Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The close above the 9-day moving average is a positive short-term indicator for trend. It is a mildly bullish indicator that the market closed over the pivot swing number. The near-term upside target is at 142-180. The next area of resistance is around 142-000 and 142-180, while 1st support hits today at 141-050 and below there at 140-270.
10 YR TREASURY NOTES (JUN): Studies are showing positive momentum but are now in overbought territory, so some caution is warranted. The market’s close above the 9-day moving average suggests the short-term trend remains positive. It is a mildly bullish indicator that the market closed over the pivot swing number. The near-term upside target is at 132-020. The next area of resistance is around 131-250 and 132-020, while 1st support hits today at 131-115 and below there at 131-065.
StockMarketNews Research Team