Notes and Bonds Continue to Torture the Shorts | RJO Futures

April 17, 2017 10:32AM CDT

Initially, Trump's agenda to raise rates has unraveled as policy switches come fast and furious, and dangerous risk of inducing military action multiplies by the week. Coupon prices printed at new highs for the year overnight to start this week, with yields approaching half way back (2.17) of the entire post–election jump. Back in November, ten years were at 1.75 and quickly jumped to a high of 2.62 in just a month. Only a week ago, the market was at 2.40 but slightly weaker economic numbers and a wobbly stock market have changed opinions. The trade location at this point seems rather marginal, and choppy action or even a correction of the large three week rally are possible. Many short positions have been cleaned out. The key as always will be the stock market trading activity. If equities can hold, expect notes and bonds to stall out and resistance at 22.17 to hold. Sunday night trading can be notorious for making a weekly extreme in price, and I think it makes some sense to lean against the highs we’ve just seen. Important reports for upcoming week are housing starts and industrial production tomorrow, April 18. Friday brings the PMI composite flash report. 

 

Jun '17 10 yr Treasury Daily Chart

10 yr Treasury Daily Chart

 

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