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5 Year Note Futures

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Free in-depth analysis of the 5 Year Note futures market written by a professional 5 Year Note trader.

June 10, 2013

10 Year Bond Futures Trader, Van Commodities, Inc. 

Since yields on Treasury notes and bonds bottomed out last July, the US Treasury curve has steepened somewhat and the curve has shifted up. Although the two year note has been anchored by the low Federal Reserve Fund Rate (Fed Funds) and yields roughly sixteen basis points (bps) more than it did a year ago, at thirty-two bps; the five year note has backed up to one hundred and twelve bps, sixty bps higher; while the ten year note and thirty year bond have increased eighty-four bps and ninety-three bps respectively.

A large percentage of the increase in the five year note yield has happened over the past month on concerns that the Federal Reserve (FED) may start to taper their Quantitative Easing program. According to Bloomberg News, the median expectation from a survey of fifty-nine economists is for the FED to taper their bond buying program to sixty-five billion from eighty-five billion dollars at their October 29-30 Federal Open Market Committee Meeting (FOMC). Traders will be watching US economic data over the summer to see if the economy slows or continues to slowly pick up steam. The direction of the economy will have implications for FED policy going forward  and whether market driven interest rate will continue to back up or if some relief in higher rates may be around the corner. Traders will be watching for US economic data at the end of the week including weekly jobless claims and Retail Sales on Thursday, followed by Industrial Production and Michigan Consumer Confidence on Friday.

The Five Year Note future (FVU13) has dropped close to two percent in price since May 02. The contract is oversold based on several short and intermediate term momentum indicators. The contract may be close to a tradable bounce to the upside. Initial support may come in at 121.04-121.22, with stronger support at 119.08-119.24. Over the near term initial resistance may come in at 122.-16-122.28, with stronger resistance at 123.04- 123.16.


January 21, 2013 

Treasury Note Broker, Van Commodities, Inc.

The five year treasury future (ZFH13) has been trapped in a narrow one and a half point trading range, 123.16-125.00, for roughly eighteen months. The Federal Reserve’s monetary policy, which includes holding Federal Funds between zero and twenty-five basis points and continuous programs of Quantitative Easing, has kept the bond vigilantes at bay, limiting attempts by market participants to short the ZFH13 contract. The question traders have to ask themselves is whether the odds of shorting the contract on rallies are slowly turning in their favor?


For some market speculators it appears ZFH13 may be putting in a longer term topping pattern. Long term momentum studies are somewhat overbought and rolling over to the downside. Intermediate term indicators are somewhat oversold and short term indicators are neutral. The contract should find initial resistance at 124.12-124.16 and then 124.20. Initial support could come in at 123.12-123.14 and further support at122.20.

5-Year Us Treasury Note Trader, June 3, 2012

The economic data released over the past week revealed a global environment of slowing growth in parts of the globe and contraction in others. Along with the continuing economic and political turmoil in the Eurozone and the banking stress in Spain, capital has continued to flow towards the U.S. dollar and U.S. Government Treasuries. The price action in the Five Year Treasury Future basis September (ZFU12) therefore continued its bull trend. 

ZFU12 is somewhat overbought based on several momentum indicators, but the trend still appears to be up on price. The contract closed in the middle of its daily range and ZFU12 is contending with some weekly trendline resistance. A bout of profit taking within the next few days would not be surprising. Initial support should appear 123.19-124.00 and further support 122.19-123.00. A price objective on the upside is 125.08 and before the bull move is complete it would not surprise to see a move towards 126.00. A break below 122.00 would lead to a reappraisal of our bullish stance.

February 6, 2012

Bond Trader, Van Commodities, Inc.

The five-year treasury note futures had a reversal day on February 03, as well as a reversal week in which the market traded above the previous weeks high and then closed below the previous weeks close. Momentum studies were also providing an overbought profile coming into last Friday’s data.

The conviction of traders seems to be split between those who look at seemingly better US economic data, from employment numbers to auto sales and some production numbers and those who are looking for further problems in Europe and see China’s rate of growth slowdown as having the potential to turn into a contraction.