While US Treasury bond prices enter the trade today sitting roughly 1 point under their recent highs, the bull camp might feel somewhat confident considering that prices have generally held up in the face of a somewhat noted improvement in overall global macro economic sentiment. In fact, Treasury prices might have been under even more pressure this morning in the wake of what might be seen as an acceptable Spanish auction. However, one can’t claim that the European debt crisis is poised to fully remain on the back burner. Other developments from the overnight action that could have pressured US Treasuries this morning were rumors that the Chinese were poised to add some liquidity and news from American Express that they saw an increase in consumer spending. With the US equity markets initially higher today and the markets potentially in a position to embrace positive economic news, it is possible that the bear camp in Treasuries will have an edge into a very active US scheduled report window. Expectations call for a minor decline in initial claims, a minor improvement in existing home sales, a minor improvement in the leaders but a weaker Philly Fed reading. The bear camp might also feel like they have an additional edge today because US corporate earnings news has generally remained positive and that is somewhat confirmed by signs of a higher opening on Wall Street for later today. In fact, with the S&P futures poised for an upside breakout, it would seem like economic sentiment is mostly upbeat today, but to maintain that track probably requires clear and definitive help from the US numbers. While the bear camp might feel like they have an edge to start, neither camp looks to have the capacity to drive Treasury prices sharply unless there is a chorus of growth in the headlines this morning. At least part of the gains forged earlier this week were the result of fear toward this morning’s Spanish auction but many traders think the auctions were good enough to put the Euro zone debt crisis on the back burner, especially with some players concerned about a series of European elections.
Technical Analysis
BONDS (JUN): Studies are showing positive momentum but are now in overbought territory, so some caution is warranted. The close above the 9-day moving average is a positive short-term indicator for trend. Market positioning is positive with the close over the 1st swing resistance. The next upside target is 142-150. The next area of resistance is around 142-070 and 142-150, while 1st support hits today at 141-150 and below there at 140-300.
10 YR TREASURY NOTES (JUN): Rising stochastics at overbought levels warrant some caution for bulls. A positive signal for trend short-term was given on a close over the 9-bar moving average. The upside daily closing price reversal gives the market a bullish tilt. It is a mildly bullish indicator that the market closed over the pivot swing number. The near-term upside target is at 131-300. The next area of resistance is around 131-255 and 131-300, while 1st support hits today at 131-135 and below there at 131-055.
StockMarketNews Research Team