RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Volatility is starting to pick up the treasury complex, overnight, we saw a high in the December 10-year note of 131-235 and a low of 131-11 and currently we are trading at 131-135. The theme of the last week has seen the note breakout to the downside and yields, which move inversely to price, follow suit making new highs for move. What we have been seeing here is the ongoing talk of the Fed possibly begin to taper. What that means is that the Fed has been buying bonds monthly since the beginning of the pandemic to keep rates artificially low to make borrowing cheaper. Unfortunately, while doing this, even as the economy has performed, the market has been sniffing out inflation. All one has to do is go to their local grocery store and gas station to see increases in both. Grain and meat products have gone up substantially and it is starting to hurt the medium and lower the class. As prices continue to skyrocket, some can’t afford to buy their wants and needs. All along, Fed Chair Powell has said he believes the rapid move in inflation is “transitory”, meaning it should subside soon.  Unfortunately for most people the market has lost faith in this believe as higher prices for consumers does not look to slow down anytime soon and the Fed might be forced to hike rates much earlier than expected.

10-Yr Note Dec ’21 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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