Daily Spot: Interest rates
A weekly summary of one complex, including daily updates of other developments elsewhere.
30-year Treasury Mar (USH) Last week’s attack on 124’18 (circled green) came close enough to require its test. The interim bounce above the prior high (highlighted yellow) made 124’18‘s eventual test likely to break lower. Monday’s “ineffectual optimism” (circled red) confirmed that buyers had not gained traction.
The return to 124’18 should not produce more than a brief, shallow bounce. The hesitation to break lower immediately is understandable considering Wednesday’s big gap down and sizable intraday slide expended a lot of selling pressure.
Breaking under 124’18 would next target 123’02-123’06. The longer that a break is delayed, the likelier that its break would be steep.
Dollar Basket Dec (DXZ) Wednesday’s gap down started the corrective drop immediately after Tuesday’s “ineffectual optimism” had warned it was coming. This made it likely to last only 1-2 days. Thursday’s 80.11 low didn’t recover 80.50-80.70, which would have signaled the rally’s resumption. Closing above 80.70 Friday would indicate the pullback had ended.
Gold Feb (GCG) Wednesday’s two probes above Tuesday’s highs didn’t gain traction. This was in-line with Tuesday afternoon’s signal that buyers had not gained traction, while sellers had not signaled a reversal. Thursday’s probe of yet higher highs also retraced back under Tuesday’s highs, which was also in-line with buyers not having gained traction, while awaiting a reversal signal from sellers. A higher high has potential to fill a gap back to 1407.00, but it would likely be rejected very harshly. And any close under 1381.00 would signal momentum already reversing down.
Crude Oil Jan (CLF) Potential for extending to 87.10 was met overnight after Wednesday’s open rejected Tuesday’s sell signal. RSIs diverged negatively to trigger a weaker open. That was recovered for the balance of the session to trend up to 88.00. Either a reversal down triggered under 87.50 will end the week, or a break above 88.50 will extend the rally through Tuesday morning.
Natural Gas Jan (NGF) Thursday’s gap up extended Wednesday’s recovery. While that was not inappropriate for the pattern, it was bad timing for the EIA report. Natty Gas tends to be wrong when it is optimistic or pessimistic ahead of EIA. In fact, its market did react negatively. But the reaction filled the gap back to Wednesday’s close and held on a closing basis. It’s bullish action, but Friday’s action may be more about consolidating the week’s volatility.
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Daily Spot coverage schedule is: Currencies (Mon), Metals (Tue), Energies (Wed), Rates (Thu), Softs (Fri, coming).