Daily Spot: Interest rates
A weekly summary of one complex, including daily updates of other developments elsewhere.[pay]
30-year Treasury Dec (USZ) The retest of 126’00 as support follows yet another shallow bounce. The last two bounces resolved in new lows at their targets without a trapping longs to refuel the decline. Either selling pressure is about to end abruptly, or bigger selling pressure pressure coming into the market.
If it is the former, that selling pressure is running dry, then pent-up buying pressure will fuel a corrective rally with potential to 130’25. But even if it is the latter, that new selling sponsorship is being attracted, then a bounce still has room to test 128’03-128’14. And a bounce should test 128’03-128’14 as resistance at some point.
The next break lower would target 124’16-124’20 regardless of its origin. Its test would be a defining moment for the long bond, whose sell-off would either be overdone, or just getting started.
Dollar Basket Dec (DXZ) Tuesday’s confirmation of Monday’s breakout allowed Wednesday’s dip to refuel buyers. Thursday’s extra dip wasn’t necessary, but it doesn’t invalidate the rally. Its opening gap down to support never extended lower intraday, suggesting that the dip was corrective, and leaving the rally free to resume.
Gold Dec (GCZ) Having filled the 1337.60 gap Tuesday and then having held it Wednesday, a corrective bounce targeting 1365.00-1372.00 became possible. Thursday’s gap up to the 1357.00 area was a good start. But any further bounce should be equally aggressive to be a correction.
Crude Oil Nov (CLZ) Wednesday’s steep drop had exceeded the 81.30-82.00 target all the way back to last month’s prior lows. The excess selling pressure triggered created a vacuum above, which triggered a gap up Thursday to quickly test 82.00. The bounce should also test 83.35 before being able to resume the decline to new relative lows.
Natural Gas Nov (NGZ) Wednesday’s breakout needed the confirmation of a higher close Wednesday. But Wednesday’s open gapped back down and extended lower. Although the entire drop was recovered to probe Wednesday’s highs, Wednesday’s highs held as resistance on a closing basis. Another intraday dip that recovers to fresh highs would be more bullish than to immediately extend higher.
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Daily Spot coverage schedule is: Currencies (Mon), Metals (Tue), Energies (Wed), Rates (Thu), Softs (Fri, coming).