Treasuries higher into the uncertain weekend

Bonds and notes moved higher into what could be a weekend packed with event risk. Ratings agencies have already marked down Greece’s debt to junk status and have downgraded that of Spain and Portugal. Some are waiting for an Italian debt downgrade. As a result, the relatively risk averse investment community is flocking to “quality” in the U.S. fixed income markets.
There was a substantial amount of economic data released Friday morning, most of which was bearish Treasuries (despite market action). The advanced GDP reading was reported at 3.2%. This was slightly below most forecasts but an overall positive figure. Chicago PMI didn’t offer any surprises at a reading of 59.5, and the Michigan Sentiment index was 72.2.
From a technical standpoint, the complex is a bit overbought and seasonal tendencies suggest lower. That said, we are concerned that the looming event risk will lead to a short squeeze. In such a scenario, the June bond could temporarily spike (filling gaps along the way) to prices has high as 121ish. If seen, this would likely be a great opportunity for the bears.
Going into Monday, the June 30-year bond is facing resistance near 119, then again at 120. The note could struggle near 118’01 and then again at 119’04. We are looking very cautiously lower.
* 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 30, 2010 Bond
April 30, 2010 Treasury Note chart
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.
Carley Garner
Senior Analyst / Commodity Broker
DeCarley Trading
Local : 702-947-0701
*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.