Mel's Blog

The recent skid is extending itself so far this morning as the Bond is trading at its worst level since 2/27.  The lock alerts from last week saved your clients 37bp in price, as the tough ceiling of resistance has forced prices lower.  

Foreign bond prices are lower as well, with prices in both Japan and Europe being pressured by inflation fears.   

New Home Sales for February will be released shortly, with market expectations of 995,000 sales for the month.  

A steady parade of economic news reports fills out the remainder of the week with Consumer Confidence tomorrow, Durable Goods Orders on Wednesday, the Final 4^th Quarter GDP on Thursday, and the potentially high-impact Personal Income and Spending Report with its imbedded inflation-measuring Core Personal Consumption Expenditures Index on Friday.   

Technically, bonds have been pushed below the 25-day MA support level last Friday and are continuing to be pushed lower toward a test of support at the 100-day MA at $99.00.  If the 100-day MA does not hold, further support is found at the 50-day MA at $98.87.  The 25-day MA will now serve as the closest level of overhead resistance at $99.18.   

A look at the Bond Page shows that we now have a clear negative stochastic crossover.  Unfortunately, this is a pretty reliable indicator that prices will continue to worsen.  But the news items of the week may come to the rescue if inflation is shown to be headed lower.