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30 Year Bond Futures

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Free in-depth analysis of the 30 Year Bond futures market written by a professional 30 Year Bond trader. 

May 26, 2013

US Treasury Bond Trader, Van Commodities, Inc.

The US Treasury Bond future (ZBM13) traded down roughly five percent over the past four weeks on the back of several factors. Stronger employment numbers at the beginning of the month, along with a continuing rally in US stock indices and renewed concerns this past week whether the Federal Reserve will begin to taper down on the volume of their Quantitative Easing program, resulted in the ZBM13 sell off.

 

Fixed income traders will be watching for several economic releases throughout next weeks holiday shortened trading to gauge the strength of the US economy. The data will include consumer confidence on Tuesday; the second estimate for first quarter GDP on Thursday, along with pending home sales data. Friday will include Personal Income and Consumption data the Chicago Purchasing Managers Index (PMI) and the final revision of Michigan Sentiment data.

 

ZBM13 is oversold based on several short term momentum studies and the market may find support for a tradable bounce in the near term. Initial support may come in at 140.12-141.28, with stronger support at 138.20-139.16. Over the near term initial resistance may come in at 144.25-145.24, with stronger resistance at 145.24-146.20.

January 6, 2013

Treasury Bond Broker, Van Commodities, Inc.

Over the past seven weeks the Treasury bond future (USH13) has traded down roughly six percent as financial markets, in general, traded with a risk on bias. Leading up to the New Year negotiations over the “Fiscal Cliff” dilemma; market expectations grew that Congress and the Executive branch would arrive at a temporary fix and financial markets would not experience a black swan event undermining risk on assets, at least over the near term. The outcome of the negotiations, arrived at over New Years Eve and New Years Day, concluded with an agreement on tax changes, extended the time frame for discussions about the sequester issue and side stepped the debt ceiling matter for several weeks. The temporary fiscal fix resulted in further selling of USH13 and a continued rally in risk on assets throughout the holiday shortened week.

 

Economic data over the past week continued to indicate a global economy that is muddling along. Purchasing Manager Indices in the US and China indicated economic growth while the Euro Zone continues to deteriorate. US employment and Unemployment data released at the end of the week were in line with market expectations and had no significant market effect. Next week the US economic data to be released are mostly second tier statistics, whereas Europe and China will have several data points of potential importance.

 

USH13 is oversold based on short term momentum studies. The contract may start to find support as traders and investors begin to reduce some portfolio risk. Initial support may come in at 143.19-144.11 and then 142.06-143.12. Over the near term USH13 may find initial resistance at 145.26-146.10 and further resistance at 146.25-147.16.

T-Bond Trader, October 30, 2012

The US Treasury Bond Future basis December (USZ12) continues to trade in a 10 handle range 144.00-154.00. Although many market participants feel that rates on the long bond offer no value, USZ12 continues to trade at historically high price levels.

 

With concern about global growth, persistent anxiety about the Euro Zone’s economic direction and the Federal Reserve’s continuation of Operation Twist until years end; USZ12 should continue to trade within its defined range until the market has a stronger opinion about the previously mentioned factors. For the rest of this week the market will be watching the ISM Manufacturing and Unemployment Claims to be delivered on November 01, 2012, and the Nonfarm Payrolls and Unemployment Statistics being delivered on November 02, 2012.

 

Momentum studies on a short to intermediate term basis have worked off their oversold condition, achieved when the futures traded to the lower end of the range over the several weeks prior. USZ12 has room to trade higher if the risk off atmosphere takes control of the investment community. On the other hand with US stock indexes registering oversold conditions, on short term momentum studies, and the S&Ps (ESZ12) holding above its 100DMA a bounce in the ESZ12, on a risk on view would result in USZ12 probably moving to the downside.

 

In the short term initial resistance for USZ12 comes in 149.12-149.17 followed by 150.06-150.22. Initial support should come in around 147.16-148.01 and then 146.10-146.22.

30-Year T-Bond Trader, May 27, 2012

The U.S. Treasury bond futures basis June (USM12) closed at 147.23. That put in right in the middle of a range between 146.24-148.24. That the contract has been carving out since May 17.  The bond contract along with the US dollar has seen continued money flows over the last two months as a result of the negative economic, political and banking news out of Greece and Spain. Global economic statistics have also continued to signal slowing global growth in several parts of the world and signs of actual economic contraction in most of the Euro zone countries.

Throughout the month of June, volatility in the international capital markets could be considerable. Starting next week investors in U.S. markets will have a four-day trading week due to the Memorial Day Holiday. Throughout the week traders will receive significant economic data from several countries around the globe including the U.S., which will release Nonfarm Payroll and Unemployment statistics along with Personal Income data and the ISM Manufacturing Index. 

Later in the month Ben Bernanke will address the US Congress Joint Economic Committee on June 7; the Greek’s will have their second set of elections June 17; the Federal Reserve (FED) will conduct their two day FOMC meeting staring June 19 and at the end of June the market will have to deal with the conclusion of the FED’s Operation Twist.

USM12 is trading at historic price levels and several momentum indicators are somewhat overbought, across several time frames. The overall trend of the contract is still up and the bulls appear to have the upper hand. If the global economy continues to give off signals of continued economic slowing and the European crisis continues to make headlines it appears the direction of least resistance will be for continued price gains. Initial support for USM12 should appear 145.30-146.24 and then 143.24-145.00. On continued lackluster economic data and questions over the European situation a target of 150.10 could be seen.

February 6, 2012

Commodities Broker, Van Commodities, Inc.

The surprisingly strong Non Farm Payroll (NFP) numbers and reduction in the Unemployment level reported on February 03, by the US Bureau of Labor did limited price damage to the US Treasury Bond market. It would appear that the statement from the Federal Reserve, on January 25, 2012 to maintain low short term rates into 2014 and the possibility of further liquidity injections, if the economy weakens, kept the markets from being to aggressive in taking prices of treasury futures down and yields in the cash market up. The possibility of a flare up in Europe’s ongoing financial problems also continue to support the US Treasury market as a possible flight to safety trade

The thirty-year treasury bond future came into last week January 30, with some momentum studies flickering overbought, but it was trading further off its contract highs then the rest of the curve. The bond future appear to be winding up for a move and bulls see the consolidation as possible triangle formation with the potential for a move to the upside, while the bears see a topping formation with a possible Head and Shoulders pattern indicating the potential for a break to the downside.

February 1, 2012 

Futures Broker, Van Commodities, Inc.

The question on the tip of many Bond traders’ minds is where should the long end of the US Treasury market be priced. The view of the bears, those traders who believe in the reflationary and stronger economic growth probability is that the long end of the US treasury curve is priced for a significant pullback. Whereas the investors residing in the bull camp think we are still stuck with further deleveraging, slow growth or a future recessionary environment and are looking for a further price move to the upside.

The March T-Bond Futures contract trading at 144.22 is not far from its front month contract highs set around 146.13 in September 2011 and secondary high made December 2011 at 146.10. The triangle configuration with previous highs mentioned above and lows around 134.22 and 140.22 are giving the bulls a view that there is more bad news coming on the economic front which will possibly take the 30 year bonds up for a retest of the contract highs and possibly a poke through which would conceivably take the cash thirty year bond yield down to retest the 2.70 yield and possibly move lower towards a yield of 2.40. The bears on the other hand are looking at a possible double top and watching to see if the consolidation band around the 140.00 to 140.16 is taken out pushing yields on the cash thirty year bond above 3.15.

The fundamentals to be watched include the European, Chinese and US economic data and traders will be closely watching their technical signals to see which fundamental factors are playing out most powerfully in the market.