Treasury traders spent the day dwelling on the boatload of supply hitting the markets as well as the fact that fixed income buyers are beginning to "demand" higher yields. $25 billion dollars in 10-year notes drew a higher than expected 3.692% with a bid to cover of 2.67 and an indirect take of only 33.2%.
The sloppy 10-year note auction and stable equities stole the spotlight away from a negative reaction to Bernanke's "exit strategy", uncertainty regarding the bailout of Greece debt, and a weaker than expected trade balance.
Believe it or not, the weather can have an impact on trade...and I am not just talking about the "rain makes grain" phenomenon. It was essentially a snow day in both New York and Chicago. Those that were able to make it to work this morning, were scrambling to leave the city by mid-day. In this case, the safe haven interest was flocking to the comfort of a warm fire. As a result, trading volume was extremely light and this left bonds and notes vulnerable to the slide.
The interest rate complex is weak, but we don't think that the selling will last forever. We do, however, feel like the slide will extend itself in the near-term. We are looking for the T-bond to reach the mid 116's at some point in the near future and our initial target in the 10-year note will be 117'09. There is some risk of the note slipping to the mid-116's and if so that would drag the long bond down to the 115 area.
* 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
The sloppy 10-year note auction and stable equities stole the spotlight away from a negative reaction to Bernanke's "exit strategy", uncertainty regarding the bailout of Greece debt, and a weaker than expected trade balance.
Believe it or not, the weather can have an impact on trade...and I am not just talking about the "rain makes grain" phenomenon. It was essentially a snow day in both New York and Chicago. Those that were able to make it to work this morning, were scrambling to leave the city by mid-day. In this case, the safe haven interest was flocking to the comfort of a warm fire. As a result, trading volume was extremely light and this left bonds and notes vulnerable to the slide.
The interest rate complex is weak, but we don't think that the selling will last forever. We do, however, feel like the slide will extend itself in the near-term. We are looking for the T-bond to reach the mid 116's at some point in the near future and our initial target in the 10-year note will be 117'09. There is some risk of the note slipping to the mid-116's and if so that would drag the long bond down to the 115 area.
* 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
