Daily Spot: Interest rates
A weekly summary of one complex, including daily updates of other developments elsewhere.
[pay]30-year Treasury Dec (USZ) The long bond couldn’t be resting more comfortably ahead of a major economic report, unless reports were released on Saturdays.
The attractions were neutralized to two overnight highs that had yet to be retested intraday. Their test also targeted 134’27, which was probed intraday and held on a closing basis. A higher close Thursday, or a close under 134’10 would have signaled the next direction.
Each was pushed, but neither snapped. A close beyond either would still be predictive, but that’s probably not very helpful on the day when a multi-point move is possible. I’ll update Friday, but I’m inclined to fade any early morning trending.
Gold Dec (GCZ) Wednesday had closed at the 1349.20 target without closing above it to gain traction. So another gap up was needed to advance the trend. This gap up was reversed to fill the gap intraday (quite a big day, in fact). This is the “warning shot across the bow” that indicates a top is starting to form. An immediate drop is unlikely, but the next several days should trace out a distribution pattern. Topping can begin as soon as Thursday’s 1357.60 opening gap is retested.
Crude Oil Nov (CLX) Wednesday’s test of the 83.20-83.25 target had held on a closing basis, having been reached by excessive optimism. More excessive optimism Thursday triggered a gap up and higher highs to 84.43. But a quick reversal fell to 81.00. This is a 38.2% retracement back to the rally’s 75.65 low. A close above 82.65 would try to resume the rally, or else launch a new downleg targeting 78.30. A close under 79.95 would target only 79.02.
Natural Gas Nov (NGX) A close above 3.91-3.95 would have been a compelling buy signal. It was attacked by Wednesday’s bounce. EIA triggered a deeper drop to new lows.
Dollar Basket Dec (DXZ) Having entrenched themselves with two consecutive lower closes, bears could have allowed a bounce to refuel the decline. But a gap down to new lows first created an opportunity to bottom. Retesting Thursday’s 77.28 opening gap and closing above Wednesday’s 77.63 close would create another opportunity to bottom.
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Daily Spot coverage schedule is: Currencies (Mon), Metals (Tue), Energies (Wed), Rates (Thu), Softs (Fri, coming).