Looking at the December 10-year note, overnight we had a high of 131-160 and a low of 131-06 and currently trading 131-12. This morning we had PPI, which came out a tad weaker than expected which has given the note a mild boost in early trading. The trend is down in treasuries with a “sell the rally” mentality firmly in place as inflation continues to creep higher with crude reaching 81.68 overnight and natural gas currently up 21-cents as we speak. This week we have seen many fed speakers come on tape and suggest that the Fed should start to taper as early as November which should keep a lid on prices for the remainder of the week. The continued talking of tapering is the Fed slowing down the purchases of bonds which has been going on since the pandemic in early 2020. The Feds continued the buying of bonds which is keeping rates artificially low, creating a bubble that is ready to burst. Being able to pick the exact time is impossible but the fed has created a monster and I believe has cornered itself while inflation related commodities have skyrocketed. It’s not a good position as investors have seen the yield on treasuries jump om the last two weeks, so I would encourage traders to be on guard as more fed officials express their desire to begin to taper.

10-Year Note Daily Chart
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Greg Perlin

Senior Market Strategist
Greg is a former Chicago Board of Trade member. He was an independent floor trader, pit broker and floor broker with Cantor Fitzgerald. Some of his clients included traders from Morgan Stanley and Lehman Brothers. He also acted in the capacity of desk manager for the morning trade desk. Greg was part of the elite Lind Plus Division for 10 years before joining RJO Futures in 2011.
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