Bond Market Levels

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Includes: EGF, FTT, GOVT, PLW, TAPR
by: John Jansen

The bond market is at some rather lofty levels, and I was just looking at some charts and my copious notes for some context. October 2, 2015, was a labor report Friday, and the headline print that day fell short of expectations. Moments prior to that report, I had marked the 10-year note at 2.051, which is virtually where it trades this morning as I compose this electronic missive. Following the dovish data, I marked the issue at 1.944 percent at 8:38 AM. The issue closed the day at 1.999. The 10-year note future closed on October 1 at 128-13, and just prior to labor data, it was trading at 128-23. It looks to me that the high print on October 2 was 129-19. I state that with a bit of uncertainty, because tradingcharts.com, which I use, marks its charts in decimals.

I note the levels because I think that the mid-190s on 10-year yields will be a huge resistance. I think the last time we traded below that was the day of the flash crash on October 14, 2014, when we had that gap down to 1.875ish. So, in the mid-190s, unless the world is into a new crater, it seems much more likely that long-term holders will be better sellers.

As an aside, I have marked 2s, 5s, and 10s that morning in the rally which ensued after the labor report at even. That spread trades at +3 this morning.