Friday, June 26, 2015

Treasuries ‘Sloppy’ Bear Reverse Appears Lasting

Despite concerns for month-end Greece debt payment failure, Treasuries trade lower.  Price action has yet to excite bearish traders as ten year yields remain comfortably below 2.5%.  This may not remain the case if Treasury futures settle just a bit lower. 

The bearish reverse in progress might be classified as ‘sloppy’.  It is not one marked by an exceptional technical development that stands out and attracts immediate attention.  Rather, the advance which started June 11th, the day retail sales for May was reported slightly better than expected and included a bullish shot in the arm with a friendlier than expected FOMC statement and post-meeting Q&A, just kind of died the result of lost bullish interest.  

Culminating in a 7th new session highs in that bull-run, TYU started a retreat on Monday following the news that ‘non-commercial’ accounts had removed a decent chunk of their net long position.  Traders started to wonder if they had not over-reacted to the FOMC statement. 

Currently TYU trades to the low reached on Tuesday and Thursday at 125-09. A move below this level will attract some attention.  A move below 124-29+ will attract momentum players.  A settle below 125-00 is likely enough to usher in a test of cash yield 2.5% from current 2.43%.  Conversely, a settle above 126 would be necessary to imagine any interesting and immediate bullish developments.

Longs from last week may decide that enough is enough and may not stay with their positions despite concerns that Greece could cause a ‘risk-off’ flight to quality bid in Treasuries.  If so, this ‘sloppy’ turn to a renewal of the intermediate-term bearish trend may get some legs.  See also: ‘Treasury Late to Party Longs on Friday Hurt’


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