Friday, July 29, 2011

$TNX $ZN_F Update

When I posted on July 11 that TNX is heading to 2.5%, many probably thought that I lost my mind.
Well, it now looks more likely, doesn't it?? We just closed at the lowest yield of 2011, right at 2.8%  You can attribute this to debt ceiling, risk-off, and European worries, but I think the biggest factor contributing to 10 yr yield is our ailing economy. It is going to be very tough to get back above 3% meaningfully if we do not get economic reports to show that 2nd half recovery is starting. None of them showed it so far, so next week's reports are going to play a huge role. Watch the yield to crater down to 2.5% and then 2.3% in not too distant future, if poor news does not turn around fast.

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