Thursday, April 29, 2010

Treasury Market Update

Take a look at the following charts of the IEI (3-7 year Treasuries), IEFs (7-10 year Treasuries) and the TLTs (20+ year Treasuries). Notice that each of these sections of the curve is in an upward sloping channel. Also note that all three are at important areas of technical resistance in the form of a downward sloping trend line.

Fundamentally, US Treasuries have caught a safety bid -- that is, investors have purchased Treasuries because of the increased risk in the European area. In addition, recent auctions of record amounts of debt have gone well (see this recent update from But on the flip side of the safety bid is a renewed risk appetite as seen in today's market action so far.

So - the question is, is there sufficient upside resistance in the Treasury market to prevent the current safety bid rally from continuing higher?