Mel's Blog

Bond prices are slightly lower this morning after being pushed back once again from a tough layer of resistance at the $99.41 level. 

It's a quiet news day, so Stocks will once again have some influence.  And currently, Stocks look like they may have reversed yesterday's course and be headed upwards.  This will likely put some selling pressure on Bonds, which are already pressed up against the aforementioned tough ceiling of resistance.

Bond prices had made a nice bounce off support from the Trend Line, and the recent move higher has the Bond in an even more "overbought" state than before, as shown by the stochastic indicator on our Bond Page.  This doesn't necessarily mean that Bond prices are going to head lower, but it does mean that a move lower in Bonds could be exacerbated.  Tomorrow's Producer Price Index and Manufacturing Reports are generally not as weighty as Friday's Consumer Price Index, but with tough overhead resistance and an overbought status, the Bond is sitting in a position vulnerable to a move lower.  Beyond the Trend Line just underlying the Bonds present level, the next nearest floor of support for the Bond lies at the 25-day Moving Average at $99.02, about 32bp lower than present levels.