Treasuries Bounce As Greek Drama Unfolds
Today’s Spotlight Market
While it may not make the top headlines, many savvy traders of all financial markets pay attention to the yield on Ten-Year US Treasury notes. Bond prices are inversely correlated with the yield. Macroeconomic and political events can quickly move bond markets, as traders quickly respond to such news by buying or selling bonds.
Fundamentals
Last week was a volatile week in the Ten-Year Treasury market, as traders balanced the positive economic news from US economic reports against the news from Europe about the varying possibilities of another deal to prevent a Greek default. US non-farm payrolls for May came in at a robust 280,000 jobs, above expectations. Also, job openings at US workplaces in April are at a record 5.38 million. This caused a rise in the yield for Ten-Year Notes and declining prices. However, European uncertainty caused some nervousness later in the week.
The Greek government has negotiated with the International Monetary Foundation to bundle all of their loan payments into one lump sum of 1.54 million Euros due on June 30th. Even if Greece is able to make the payment, there is continued speculation about how much of an additional strain that would put on the cash-strapped government?s ability to make payroll and pension payments.? This uncertainty caused Ten-Year Note prices to rise and yields to decline.
Technical Notes? -? View Today’s Chart
Despite the end of week run-up, the 3-month continuation chart for Ten-Year Notes is still bearish. Ten-Year Notes are trading below the 10-day and 50-day Simple Moving Averages, a bearish sign. The 20-day Simple Moving Average crossed below the 50-day Simple Moving Average back in the middle of May, another bearish sign. The 50-day SMA was a previous level of resistance; now resistance is found on the 20-day SMA.
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