Bonds and notes enjoyed another day of healthy gains despite relatively stable equities. This suggests that there are factors at work other than simple portfolio allocation.
The day’s news was overall bullish to neutral for Treasuries and bearish to neutral for stocks, but only one market chose to react. Fixed income products moved higher on weaker than expected existing home sales and a slightly disappointing University of Michigan consumer sentiment reading. On the contrary, the GDP revision was positive and Chicago PMI was strong.
Some analysts are noting that lingering buy stops seem to have been cleared out on the move and that much of the buying can be attributed to month/week end data. That said, we feel like the buying will continue in the near-term but will be growing bearish at moderately higher levels.
Today was first notice day for the March Treasuries. You should be trading June…especially if you are buying futures. Anyone holding longs into today is subject to being assigned delivery of the underlying asset. If you are short, you aren’t at risk of delivery but you are at risk of being caught in a thinning market.
Our upside targets remain the same, but we are now using June figures. Therefore, we are looking for the rally to continue to about 118’18ish in the June T-bond. The note, on the other hand, has reached our target but it seems like the long bond could drag it a bit higher. We are growing short-term bearish the T-note but think that the mid-to-high 117’s could be seen in the June contract.
Treasury Bond and Note Option Trading Recommendations
**There is unlimited risk in naked option selling.
February 18 – Our clients were recommended to sell April bond 111 puts for 23/24 today.
ยท February 23 – Our clients were advised to buy these back today at 8 or better. Assuming a fill at 23 getting in and exiting at 8, this is a profit of about $234 per contract before commissions and fees.
Treasury Bond and Note Futures Trading Recommendations
**There is unlimited risk in trading futures.
Flat
Carley Garner
Senior Analyst / Commodity Broker
DeCarley Trading
cgarner@DeCarleyTrading.com
1-866-790-TRADE
Local : 702-947-0701
www.DeCarleyTrading.com
www.ATradersFirstBookonCommodities.com
*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.
There is substantial risk of loss in trading futures and options.
Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.
Comments are closed.