Treasury Yields Fall on Ukraine Concerns
Today’s Spotlight Market
Mixed economic data on Friday, did little to sway the bullish bond price trend. For example:? The Empire state manufacturing index, which measures manufacturing growth in the state of New York, slowed to a reading of 14.7 vs. 25.6 in July. However, this data was offset by a larger than expected rise in U.S. Industrial production which rose by 0.4% vs. an expected 0.3% gain. ?
Fundamentals
U.S. Treasury yields continue to tumble, defying analysts who are looking for interest rates to increase in the coming months as the Federal Reserve winds down it?s program of bond purchases. 10-year Note yields fell to their lowest levels in 14 months as reports of Ukrainian troops attacking a Russian convoy. This heightened traders concerns that Russia is planning to increase its military presence in the embattled nation. Traders reported heavy buying in the cash treasury market after the reports surfaced, in an apparent move towards ?safe haven? assets going into the weekend. Bonds also received a boost from a well-received auction of 30-year Bonds on Thursday, which is a sign of strong demand for longer-term Treasuries despite current low yields. U.S. Bonds look attractive to foreign buyers, especially in Europe and Japan where government bond yields are even lower. Traders will turn their focus this week to comments by prominent central bank officials and finance ministers such as Fed Chairwomen Janet Yellen and ECB President Mario Draghi who are meeting at the annual Jackson Hole Economic Policy Symposium hosted by the Federal Reserve Bank of Kansas City. ?
Technical Notes? -? View Today’s Chart
Looking at the daily continuation chart for 10-year Note futures, we notice prices attempting an upside break-out. We are seeing the 20-day moving average (MA) begin to pull away to the upside from the 200-day MA, which is viewed as bullish signal by some technicians. The 14-day RSI has entered overbought territory, however, with a current reading of 70.70. 127-10 is seen as the next resistance level for the front-month 10-year Note futures, with support seen at 124-07.5.?
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