Thursday, February 5, 2015

Chance Equities Signal Possible Treasury Move Pre-NFP

S&P looks like it could take a run higher against the Jan 23 high of 2062.50 (esh5 E-mini future).  It breaks a bearish trend line today dating from the Dec 30 high and a besting of the Jan 23 high would put that Dec 2088.50 high on the target. 

A firm equity market might be expected to attract sellers to fixed income futures today and this is what we normally expect with good news for economy, today higher hourly earnings report, pressing rates higher in anticipation of a Fed response.  History advises however that price action generally consolidates on the session(s) in front of the Employment report. 

Were economic agents convinced that something material has changed, we would expect further selling in Treasuries from the higher opening levels.  Otherwise, a slow bleed back toward higher opening levels has historic precedent.  

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