Daily Spot: Interest rates

A weekly summary of one complex, including daily updates of other developments elsewhere.[pay]

30-year Treasury Jun (USM) Retesting the rally’s target. Wednesday’s drop had failed to confirm Tuesday’s breakout. It also reacted down from Tuesday’s test of the 122’02 target. But the gap back up to Wednesday’s open needed to be filled, and Thursday’s rally filled it. In fact, fresh highs were probed up to 122’10.

Now Thursday’s open has created a gap back down to Wednesday’s 121’12 close. It should be filled, especially since Thursday’s intraday fresh highs did not produce a new high close. Any initial weakness would be credible for extending down to test 120’25 support, whose break on a closing basis would trigger a new downleg.

Dollar Basket Jun (DXM) FWIW, Ben doesn’t favor this action. Forming all of a bottoming pattern, without actually triggering it at Wednesday’s close, confirmed the decline’s momentum remained intact. Thursday’s open gapped down to a new low and probed lower lows. But the close recovered back to the open’s 74.42 gap. Thursday’s range would form an Island if Friday’s open were to gap above Thursday afternoon’s 73.70-73.85 lows. Otherwise, the trend’s momentum remains intact.

Gold Jun (GCM) Back to business. Thursday’s s gap up extended to test 1539.00, and extended Wednesday’s strong reaction to Bernanke’s speech. After abbreviating its pullback Tuesday, the resumed rally’s steepness suggests that its first stumble will be steep, too.

Crude Oil Jun (CLM) Still probing highs, and still failing them. Potential to further probe the rally’s original 113.00 target was fulfilled Thursday, up to 114.00. Regardless, momentum would not be signaled reversing down until closing under 111.65. A reaction down from 114.00 did touch 111.65, chipping away at its support, but not yet closing under it.

Natural Gas Jun (NGM) The wait is rewarded, and then some. The extended narrow consolidation did break sharply higher to immediately fulfill the next target at 4.55. Exceeding the target up to 4.60 offers some potential for a bigger rally leg to be unfolding, so long as pullbacks now hold 4.52 as support, and especially if Friday’s close is higher for a second consecutive session to confirm Thursday’s breakout. But closing any lower – or not confirming Thursday’s breakout attempt – would be vulnerable to another downleg next week.

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Daily Spot coverage schedule is: Currencies (Mon), Metals (Tue), Energies (Wed), Rates (Thu), Weekender (Fri).