Tuesday, November 10, 2015

10 yr Auction Well Enough - On with Short Covering...

The 10yr Treasury auction results were posted just as cash and futures were trading at the session high.  The auction went well enough and should not override earlier noted considerations (S&P 500 Index and Treasuries Both Reversing (for a time)... ) that are expected to have bullish impact on Treasury prices today. 


Stronger price action early this afternoon might prompt some short covering going into tomorrows, cash and fixed income futures closing holiday.  While we are constructive of economic prospects and inclined to give credit to the latest employment report as guiding the Fed toward lifting policy rates at the December FOMC meeting, we see some oversold conditions in Treasuries, especially toward 3’s-10’s.  That condition is expected to be rectified by additional price gains over the next couple (few) of sessions.  We would be quicker to sell into strength on outsized gains on the wings of the curve.  In particular EDZ5, EDH6, Bonds and Ultra Bonds.    

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