It wasn't so long ago that we were discussing 118-05 in 10yr tsy futures.. If you recall this commentary, there was quite the busy little chart near the end of the post. You're up to speed on the range trade between technical price levels, and so you probably wouldn't be surprised to see 118-05. It's a good thing too, because here it is, exhibiting some of that same old "one man's ceiling is another man's floor"
Ah.. Noticed the question mark did you? No sense beating around the bush. The range trade continues to dominate. Technical price levels continue to have a "gravity" that will only be broken by something more potent. At least we got a little green today for MBS. 4.5's were up 9 ticks on the day to 100-24. As per usual in rallies, we were outdone on a price basis by the 10yr which rose 15 ticks dropping the yield to 3.408. That AQ man... He was saying something about 3.41, and I think we should go ahead and give him the 2 hundredths... Another technical level... But where does this leave us on the week?
MBS....
TSY's....
S&P .....
Stocks win, we lose. Another day's end and week's end where we are on some middle of the road technical fence while stocks surge higher... But it should be noted that the Dow closed at 9996... And though it made it over 10k this week, you're well aware if you look at some of the trendlines we lay over either uber-long term charts, or even shorter term charts with an uber-low interval, that it's not uncommon to see a small distribution moving AROUND a price level or trendline as opposed to simple bouncing off with perfect behavior.
AQ outlined the risks a few hours ago, so the apparent first signs of "stalling" or "thinking twice" in stocks may give some the hope for bonds to have a turn at having a green week. It's hard to have a strong opinion either way with 10bps of room to run in the 10yr before hitting the 3.5 ceiling we discussed last night. Plus, if the short end of the curve comes under heavy attack next week with the bordering-on-excessive levels of Fed speeches, plus the beige book, support for 3.5 can rapidly get more tenuous. In addition to the Fed's veritable homecoming, we also get PPI, housing starts, Home Sales, and your friend and mine, tsy auction announcements. Oh wait... Normally not that friendly. All that said, I think next week presents a really good opportunity to get off the fence. So be prepared to to land on the ground at some point next week... Just hope it's the grassy green side and not the other...
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