Neither market has any firm direction right now and is instead at the mercy of macro economic and political events. There is no trade that I can see right now.A lot can happen over a week. The debt ceiling debate resolution has resolved a few important things.
1.) It has taken a great destabilizer off the table -- namely, the prospect of a US government default. This has removed a big downward pull in the market.
2.) #1 will increase the importance of economic news to the financial markets -- and that news has been disproportionately bad over the last month to month and a half. As such Treasuries now look like an attractive investment.
3.) We still have the EU situation to worry about, which means point #1 is that much more importance.
4.) There is little concern the Fed will lower rates anytime soon, which removes downward pressure.
5.) Inflation is low, which also lowers sell-side pressures.
In short, there is a tremendous amount of upward fundamental pressure right now in the Treasury market.
Neither market has any firm direction right now and is instead at the mercy of macro economic and political events. There is no trade that I can see right now.
The five minute chart shows a tight consolidation range between 97 and 97.7 that lasted for seven days. However, prices gapped higher on Friday, gapped lower at today's open but then rallied on the weak ISM reading.
The prices action for the last two days shows that prices have moved through key resistance and are approaching yearly highs.
The A/D and CMF indicate money is flowing into the market, while the MACD has given a buy signal.
The primary fundamental that concerns me with moving into this security is the yearly high, which could still provide upside resistance. But a move through that level would be a buy signal, as the fundamental situation has turned bond market bullish.
