Morning Futures Roundup
How Long Will Investors Keep Settling for Low Yields?
Fundamentals
Treasury futures have held steady in recent sessions on sovereign debt and economic concerns. Europe has not yet been able to devise a plan that would bring stability to the region, creating overseas investment demand despite extremely low yields. Chinese economic growth has been on traders' minds, as there is concern that China will focus on economic reforms instead of aggressively attempting to stimulate economic growth. The result could be a significant slowdown. Despite these bullish factors, yields are simply too low for many investors to accept. The current sub 2% yields on the 10-Year Note could result in investors looking toward blue chip stocks or commodities as alternatives. Inflation adjusted, Note yields are currently negative, suggesting a price ceiling near the 132 level.
Technical Notes
Turning to the chart, we see the June 10-Year Note contract rallying back after testing support at the 127-16 level. The momentum of the market has slowed in recent sessions, suggesting prices may move back into a range between 130-00 and 132-16. There are conflicting indicators, as RSI has peaked and is beginning to reverse back, resulting in bearish divergence. However, momentum continues to outpace both price and RSI to the upside, hinting at further strength in the near-term.
CLICK HERE FOR THE FULL-SIZED CHART
-------------------------------------------------------------------------------
Disclaimers
This article is provided for informational purposes only. No statementin this article should be construed as a recommendation to buy or sell asecurity or to provide investment advice. The content provided has beenobtained from sources deemed reliable but is not guaranteed as toaccuracy and completeness. optionsXpress makes every effort to providetimely information to its recipients but cannot guarantee specificdelivery times due to factors beyond our control.
Derivatives involve substantial risk and are not appropriate for all investors. Please read the "Disclosure Statement for Futures and Options" prior to investing in futures or options.
For investments using a straddle or strangle options strategy thepotential loss is unlimited. Multi-leg option strategies are subject tomultiple commissions. Profits may be eroded by the commission expendedto open and close the positions and other risks apply.
"
About Mike Zarembski
Born in the grain pits of the Mid-America Commodity Exchange (MidAm) in the early 1990s, Mike's futures career soon shifted to the offices of TD Waterhouse in 1999, followed by Xpresstrade in 2002 and eventually optionsXpress in 2007.
View Mike Zarembski's post archive >
