Previewing Today's Market Ghost Town
The only thing of note today (there are no economic announcements at all, just the Fed disclosing the latest Op Twist schedule at 2 pm) is that while the bond market closes at 2pm, stocks will be left unsupervised for two hours of sheer idiocy between then and their normal closing time of 4pm by which point there will be nobody left trading, just some GETCO algo lifting every offer then dumping it all having made money over VWAP and suckered in the momos, as happens every single day on no volume levitation.
As for the big picture, for those three people who care, here is Stone McCarthy's explanation:
Even as the trend is still higher for Treasury prices (lower for yields) since the October lows, it can be argued that a significant deceleration in this trend is underway. Specifically, while there is always the possibility that Treasury prices can overshoot their December highs on thin flows during the trend deceleration process in the days ahead, the multi-year CFTC COT-related extremes and diverging weekly momentum that preceded the 12/19 price highs increase the likelihood that any move to new price highs would be short-lived. In addition, despite the fact that it has occurred during the quietest 2-week period of the year, recent gains by the S&P 500 offer structural potential for further gains of roughly 2.5% to 3.9% (SPX 1293 to 1311) from current levels over the near-term, as long as SPX 1229 holds during the current equity correction.
As we noted on Wednesday, the trend that had been driving Treasury prices lower (yields higher) since the early part of last week was neutralized during Wednesday's rally, resulting in a more rangebound outlook for Treasury prices. Currently, the active 10-Yr contact is working in the direction of the high-end of this range near 131-05. This will remain the case until a sustained intra-day breach of 130-13+ opens the door to the low-end of the range near 129-30