Earlier this week we urged all of our clients to get flat Treasuries because things didn’t “feel” right and they still don’t. Treasuries have managed to maintain an upward bias in the face of higher equities (the few bounces that we have gotten), a recovery in the Euro, this signals that there are some behind the scenes forces that are carrying a bit more weight such as emotion.
When markets become emotional, they are nearly impossible to predict. Let’s face it, humans are unpredictable and market prices are the result of the conglomerate of human reaction to news and events. That said, under most circumstances I believe that the Treasury markets tend to maintain their composure much better than equities do. As a result, bonds and notes are often late to react to the equity and currency markets; accordingly, we don’t feel as though being short Treasuries has the risk reward prospects that we would like to see. Perhaps sitting on the sidelines is the best position for now.
The economic calendar for next week will be thick and might be what the markets need to get their heads off of Europe. We can’t deny that a credit crisis overseas wouldn’t be devastating for domestic markets but we also can’t assume that European leaders won’t make the reform necessary to mitigate the pain. If you have to play Treasuries, you should likely have a bearish bias but you want to keep risks low and don’t overstay your welcome. Friday’s highs should stay intact for now; if so, support in the 30-year comes in near 123’27 and then again near 123’04. Good luck!
* 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.
Treasury Bond and Note Futures Trading Recommendations
**There is unlimited risk in trading futures.
Senior Analyst / Commodity Broker
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.