05 July 2007

Next Leg Down For Treasuries?

Earlier in the week I highlighted a setup in 10 year t-notes. Aggressive traders may have taken a short trade straight of that setup, others may wait for a confirmation of price breaking below the trendline. Those waiting got their trigger today.

However there was clue that this would definitely break down in the price action of the Eurobund, which put in a nasty down day on tuesday and has continues down since.

Now things get very interesting, and not just for bonds. Equities are not likely to react well to lower bond prices and the US indices are off a few points as a result.

Technically, there are some obvious points of possible support, but below Junes low folks will likely start shitting themselves. As several commentators have pointed out recently, the market is starting to do what the Fed refuses to do... and should do.

Elswhere, the Brit have jacked rates up another quarter (but should have gone .5), and the Eurozone is announcing later today.

No comments: