Wednesday, June 29, 2011

10-Yr T-Note Futures

For whatever the reason: YES Greek vote, better US housing data, higher equities, or even a fear of US debt default - ZNU1 is cratering, therefore yield TNX is higher (always opposite on price and yield for those who are new to this). So we look at technicals. We are at 50 day sma on both price and yield. 10-year T-Note is one of the most technical instruments of all, those bond traders in CME trading pit swear by this stuff. Yield is bumping against the 200 day sma as well, so we have 250 soldiers defending this level on TNX (50 / 200 dsma laminate). There is also resistance from 3/16 and 5/6 lows right here.
We have a crucial NFP (non-farm payrolls) next Friday. I think that it is going to keep bond traders on edge and not let them drive the yield too much higher, we are @ 3.1% - one month high as I type. Some are expecting a very ugly NFP. That said, everyone and their brother is now expecting a stronger 2nd half of the year.
Tomorrow we will get weekly unemployment claims and Chicago PMI, followed by closely-watched  ISM Mfg PMI on Friday. Be ready for some fireworks and indecision-based volatility, with liquidity drying up into the long weekend, and traders hitting the road and beaches early. Keep very small positions or none at all...

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