Treasuries consolidate ahead of FOMC

As is often the case, it appears as though traders spent the day squaring positions ahead of the FOMC meeting. The Fed will meet tomorrow but we won’t hear the results of the interest rate decision until Wednesday afternoon.
Most analysts aren’t expecting the Fed to take any action to change monetary policy but there is some speculation of rate hikes later in the year, so traders will pay close attention to the commentary.
This week’s auctions began today with a 5-year TIPS offering, but the real news will come in the next few sessions with the issuance of $44 billion in 2-year notes, $42 billion in 5-year notes and $32 billion in 7-years. The TIPS went off with ok demand from domestic investors but low demand from overseas investors; this put the market back on the defensive. The Treasury complex noticeably weakened following the auction.
We continue to see support in the 30-year bond near 116 but the 10-year note reached our downside target in overnight trade (within a few ticks anyway). This leaves our charts, and our opinion, a bit mixed. We are taking a relatively neutral stance in the near-term as direction will be highly dependent on the FOMC, stocks and auctions…and this could be a difficult week to predict price.
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* 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.

April 26, 2010 T-bond
April 26 Treasury Note
Treasury Bond and Note Option Trading Recommendations
**There is unlimited risk in naked option selling.
April 22 – Our clients were advised to sell the July bond 121 calls for 22 or better, and were filled this morning on the rally.
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
http://www.DeCarleyTrading.com
http://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.

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