Daily Spot: Interest rates
A weekly summary of one complex, including daily updates of other developments elsewhere.[pay]
Dollar Basket Jun (DXM) Plunge not surprising after buyers doubled down on the crazy. Thursday’s second probe above 77.05 was no more likely than Monday’s to recover, especially after closing back under 77.05.
Unfinished business below – a probe under prior lows – made any interim rally effort unlikely to gain traction. Gapping down under prior lows may have been overkill. Without extending down intraday, the session formed “ineffectual pessimism” that could form an Island.
Gapping up above 76.60 would trigger a quick rally up to 78.00 before reversing to retest the Island. Otherwise, any lesser immediate strength would likely fail and reverse back down to fresh lows.
Gold Apr (GCJ) Two “ineffectual optimisms” don’t cancel each other out. Wednesday’s close under 1399.00 wasn’t repeated Thursday. But sellers still get a benefit of the doubt since Thursday was an inside day. And it was an inside that trended up, which is another form of “ineffectual optimism” – a second consecutive day of it. Any immediate weakness Friday would be credible for extending down sharply. But any further delay in exploiting the “ineffectual optimism” would be vulnerable to retesting 1424.00.
30-year Treasury Jun (USM) Correcting the ill-gotten gains to get more. Thursday’s close just under 122’00 was really still in the process of testing it. Immediately rallying at the open and into the weekend would help to confirm the 125’00 target remains in-play. Otherwise, the pullback has room down to 121’08 before sellers would start gaining traction.
Crude Oil Apr (CLJ) Confirmed: The drop’s confirmation was premature. Suspicions proved well-founded that Wednesday’s second consecutive close under 99.00 wasn’t low enough. Thursday’s session-long rall extended to 101.99. Another close under 99.00 would get the same benefit of the doubt that a steeper and deeper downleg has begun. Otherwise, this bounce is targeting 104.50, potentially fresh highs up to 107.25.
Natural Gas May (NGK) Huge intraday rally almost worth the wait. Finally! As suspected, when the 4.02 buy signal finally triggered on a closing basis, the close was likely to be up above 4.15. In fact, gapping up above 4.02, and after retesting it as support at the open, an assist from EIA surged up to 4.15. The balance of the session trended up further, to within 1-2 cents of the 4.25 target. Already. The next higher targets are 4.35 and 4.40, with potential to 4.55.
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Daily Spot coverage schedule is: Currencies (Mon), Metals (Tue), Energies (Wed), Rates (Thu), Weekender (Fri).