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Bonds Market Analysis

With initial gains seen in European and US equities to start today, it would seem like safe haven demand for US Treasuries continues to wane a bit. The bear camp in US Treasuries is probably garnering some carryover assistance from the flow of scheduled US data this week, which has generally come in a touch better than most expectations. With slightly improved US data, periodic gains in equities and a pause in severe Euro zone angst, the bear camp has gained and maintained a very slight edge. One might also suggest that Fed dialogue this week reduced the prospect of near term easing action from the US Fed. There does appear to have been a shift in Euro crisis thinking this week, as a growing portion of the market has seemingly shifted into a position where an orderly Greek exit is anticipated and even more surprising is that a growing portion of the trade also thinks that will be a positive economic development for the EU and the rest of the world. Clearly the markets want and need an “orderly” exit and while a US Fed official suggested that was still possible, that doesn’t mean an orderly exit will be ultimately seen! In looking ahead to the action today, the bear camp in Treasuries seems to have the initial edge off weaker chart action and also because of periodic positive action in the US equity markets. However, traders should expect some type of critical pivot point this morning, in the wake of the European equity market closes, as that action could set the tone for the rest of the US Friday trade. The US scheduled report slate today is rather thin, with a Fed speech from Germany seen early on and a private consumer survey due out later on. Some players think that Treasury prices might begin to see less pressure today, now that this week’s supply is out of the way, while others will take more of their direction from the tone of the European situation into that regions equity market close.

Technical Analysis

BONDS (JUN): Momentum studies trending lower from overbought levels is a bearish indicator and would tend to reinforce lower price action. The market’s close below the 9-day moving average is an indication the short-term trend remains negative. The market setup is somewhat negative with the close under the 1st swing support. The next downside target is 146-060. Short-term indicators on the defensive. Consider selling an intraday bounce. The next area of resistance is around 147-280 and 148-270, while 1st support hits today at 146-180 and below there at 146-060.

10 YR TREASURY NOTES (JUN): Daily stochastics turning lower from overbought levels is bearish and will tend to reinforce a downside break especially if near term support is penetrated. The close below the 9-day moving average is a negative short-term indicator for trend. The market setup is somewhat negative with the close under the 1st swing support. The next downside objective is 133-005. Short-term indicators on the defensive. Consider selling an intraday bounce. The next area of resistance is around 133-215 and 134-010, while 1st support hits today at 133-055 and below there at 133-005.

 

StockMarketNews Research Team

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