Economic data was mixed and equities held their ground but Treasuries managed to muster up enough momentum to stage an impressive rally. It seems as though the short squeeze has begun...and seasonal strength may eventually take this rally much higher than many are anticipating.
The second quarter advanced GDP was reported as being better than expected at a negative 1%. Most were looking for a draw of 1.5%, but it was a downward revision in the first quarter figure that prompted bond buying. Also helping the bull case was a tick higher in the inflation components of the report.
It seems to me that the day's gains can be more reasonably attributed to a continuation of the market's sigh of relief following the 7-year note auction. After poor showings in the 2 and 5-year note space, the market had been anticipating the worst.
Unfortunately, we let the uncertainty over the auction and putting too much faith into the negative correlation between stocks and bonds to get in the way of our bullish stance. It appears as though we may have missed the low in terms of our guidance. However, if seasonals have anything to do with it, this rally could have room to run.
Look for digestion early next week that could see support near 117'26 in the 30-year bond and 116'16 in the 10-year note. However, the note will need to see a close above 117 on Monday to keep the rally alive. Resistance in the 5-year note comes in near 115'17, we will need to get a close above this area early next week to see some follow through buying.
Sorry so short, enjoy your weekend!
* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.
**Seasonality is already be factored into current prices, any references to such does not indicate future market action.
Treasury Bond and Note Option Trading Recommendations
**There is unlimited risk in naked option selling.
Flat
Treasury Bond and Note Futures Trading Recommendations
**There is unlimited risk in trading futures.
Flat
Eurodollar Futures Trading Recommendations
**There is unlimited risk in trading futures.
June 29 - Our clients were recommended to sell September Eurodollar futures while buying a 9937.5 call as insurance. The calls were getting filled near 7 ticks, and the futures near 9933. This makes the total risk on the trade at expiration $287.50 before commissions and fees.
The second quarter advanced GDP was reported as being better than expected at a negative 1%. Most were looking for a draw of 1.5%, but it was a downward revision in the first quarter figure that prompted bond buying. Also helping the bull case was a tick higher in the inflation components of the report.
It seems to me that the day's gains can be more reasonably attributed to a continuation of the market's sigh of relief following the 7-year note auction. After poor showings in the 2 and 5-year note space, the market had been anticipating the worst.
Unfortunately, we let the uncertainty over the auction and putting too much faith into the negative correlation between stocks and bonds to get in the way of our bullish stance. It appears as though we may have missed the low in terms of our guidance. However, if seasonals have anything to do with it, this rally could have room to run.
Look for digestion early next week that could see support near 117'26 in the 30-year bond and 116'16 in the 10-year note. However, the note will need to see a close above 117 on Monday to keep the rally alive. Resistance in the 5-year note comes in near 115'17, we will need to get a close above this area early next week to see some follow through buying.
Sorry so short, enjoy your weekend!
* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.
**Seasonality is already be factored into current prices, any references to such does not indicate future market action.
Treasury Bond and Note Option Trading Recommendations
**There is unlimited risk in naked option selling.
Flat
Treasury Bond and Note Futures Trading Recommendations
**There is unlimited risk in trading futures.
Flat
Eurodollar Futures Trading Recommendations
**There is unlimited risk in trading futures.
June 29 - Our clients were recommended to sell September Eurodollar futures while buying a 9937.5 call as insurance. The calls were getting filled near 7 ticks, and the futures near 9933. This makes the total risk on the trade at expiration $287.50 before commissions and fees.
