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Fixed Income Update: More Supply

Tyler Durden's picture
Submitted by Tyler Durden on 10/26/2009 08:13 -0500



Submitted by Nic Lenoir of ICAP

We have a lot of fresh Treasury supply coming in this week. The last 30-Y auction put an end to a series off auctions that were coming in better than expected. However, as we had warned before that last long bond auction, the expected yield below 4% had the potential to trigger some retaliation by real money investors. Sure enoguh the scenario played out and since then yield have backed up towards 4.30%. Also as pointed out last week 3.50% on the 10Y is a relatively key psychological level.

On the 30-minute chart we see there is a fair bit of divergence, and we we have a clear reistance trend we are flirting with this morning, the lower part of the range 117-10/13 should be bought here in short term trading to play a retracement towards 118-13. Only a break there would potentially invalidate the downtrend we have been in.

Good luck trading,

Nic 

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by TumblingDice
on Mon, 10/26/2009 - 10:25
#110589

Treasury prices staying in oversold territory so comfortably indicates to me that there is further downside for some time.

It would be surprising to me if the long stocks/long treasury trade comes back anytime soon.

by jm
on Mon, 10/26/2009 - 10:43
#110596

Seems so.  I do wonder about the likelihood of yield curve inversion in the next few months...

 

 

by Lionhead
on Mon, 10/26/2009 - 12:31
#110689

Keep 'em coming Nic.

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