Untitled Document

US Treasuries began the new trading week with gains after equities staged a significant pullback. The flight to secure debt was spurred by 1st quarter reports from Bank of America. While the controversial institution posted profits for the quarter, they also reported an increase in reserves needed to cover bad loans. Renewed concerns regarding increased credit losses spurred buyers to seek safe haven positions in secure debt and safe haven currencies (US Dollar, Japanese Yen).

 

Speculation that the stellar earnings achieved by many of the financial institutions in the 1st quarter will not be repeated going forward also increased interest in Treasuries, particularly as the debt instruments reached attractive yields relative to the range bound movements which the instruments have been trading in for well over a month.  Monday’s move higher allowed yields on 10 and 30 US treasuries to rebound from their lowest levels in month.

 

Speaking of technicals, June US 30 year futures rebounded from key support levels that seem to be gaining direction from fundamental catalysts in the near term. Market is giving little indication of breaking out of its trade range between 125.000 and 128.000. In near term look for a possible pullback to 126.025 as a near term support. Upside movement should find resistance at 127.105.

US DEBT FUTURES

OPEN

HIGH

LOW

CLOSE

CHANGE

US M9 (US 30 YRS)

125.080

126.235

125.045

126.210

+1 10/32nds

TY M9 (US 10 YRS)

122.070

123.065

122.050

123.010

+24/32nds