Treasuries have been in a big downtrend in 2009 as they face the Scylla and Charybdis of big budget deficits and the “green shots” of economic growth traders keep seeing.The past two weeks have seen two new down legs as support at 114-12 and 112-31 (see the chart) have been taken out.With the last leg of quarterly refunding ending today with a 30 year T Bond auction, it seems to be a good time to look at them.
Earlier this morning Bond futures tested broken support at 112-31; they are currently trading about 10 points under there.I’d say Bonds are a crossroads here.112-31 is resistance; note how the day after 114-12 was broken they retested that level before breaking down.Will they do the same thing with 112-31?An ability to regain 112-31 could be the first green shoot for the Bon bulls.Failure to take it out indicates the bears still have control.
Will resistance hold?
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