Treasury Bonds: The Bull Market That Will Not End
Today’s Spotlight Market
Here are the highlights from the October payroll reports for the U.S. and Canada
???????????????????????????????? Payrolls?????????????????????? Unemployment Rate
U.S.???????????????????? + 214,000 Oct????????????????????????????? 5.8%
Canada????????????????? +43,100 Oct????????????????????????????? 6.5%
Fundamentals
You have to hand it to those traders who have remained bullish on U.S. Treasury Bond futures, as this bull market just refuses to end, despite many pundits? calls that interest rates have bottomed. Just last week, Treasury futures prices rebounded from a short-term correction following the price ?spike? back on October 15 which sent prices higher by over 6 full points in just one trading session.
The October Non-farm Payrolls report was the latest catalyst to cause grief for Bond bears, as the number of jobs created last month were on the low side of analysts? estimates. While the payroll figures were not horrible, another month of moderate job growth with no signs of wage inflation should allow the Federal Reserve to remain on hold for several more months before finally beginning the process of raising the Fed Funds rate. In fact, Fed Chairwoman Janet Yellen made comments at a conference in Paris last Friday that ?supportive policy remains necessary? due to the anemic pace of economic growth.
The so-called U6 employment figure, which is a broader measure of U.S. employment, was at 11.5% in October. While the rate fell by 0.3% from September?s figure, it is still well above the percentages seen during the last major U.S. recovery period, where the U6 rate was closer to 9%. In addition, another consideration is that interest rates on German and Japanese government bonds, which many investors also consider ?safe haven? assets, are well below the rates currently available on U.S. Treasuries. So for non-U.S. investors, U.S. rates look ?attractive,? which adds additional buying pressure to the U.S. Treasury market.? ?
Technical Notes? -? View Today’s Chart
Looking at the monthly continuation chart for Treasury Bond futures, we note that prices have been in a minor uptrend since the start of 2014, with the monthly chart eliminating some of the ?noise? seen on the daily chart. The big-picture chart clearly favors the bull camp, as the major trend-lines drawn from both the 1981 and 1984 major lows have not yet been tested. The 14-month RSI is currently neutral to slightly positive, with a current reading of 55.49. Support is found at the minor uptrend line drawn from the December 2013 low near the 137-00 price level. Upside resistance is seen at the October 2014 ?spike? high at 148-00.???
——————————————————————————————
This article is provided for informational purposes only. No statement in this article should be construed as a recommendation to buy or sell a security or to provide investment advice. The content provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy and completeness. optionsXpress makes every effort to provide timely information to its recipients but cannot guarantee specific delivery 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 the potential loss is unlimited. Multi-leg option strategies are subject to multiple commissions. Profits may be eroded by the commission expended to open and close the positions and?other risks?apply.