Outlook For Treasury Bonds Remains To The Downside

The weak rally in the 30 Year futures peaked yesterday as anticipated.  The futures are making a clear commitment to the downtrend, and will need a sharp reversal in equities to change this development.  The 30 Year futures are dropping below 3/24 lows as we type, and a retracement beneath our downtrend line seems imminent.

The question becomes whether April lows can hold.  If not, then we could see the present selloff pick up.  April volume remains relatively light compared to March.  The downturn in the 30 Year futures could be a cause for concern for the Federal Reserve, indicating the concept of quantitative easing may not have the desired impact on interest rates.

Meanwhile, China is quietly coordinating large currency swaps with several countries to take a jab at the Federal Reserve, showing they are prepared to diversify their foreign exchange reserves from a heavy reliance on U.S. debt.  This development is disconcerting for the 30 Year futures since the T-Bond auctions may not get as much interest from foreign invest as anticipated.  Our outlook for the 30 Year futures remains to the downside for the above-mentioned reasons.

Fundamentally, we hold our resistances of 127.05, 127.28, 127.64, 127.89, and 128.31.  To the downside, we maintain our supports of 126.69, 126.45, 126.19, 125.91, and 125.47.  The 30 Year T-Bond futures are presently trading at 126 23.0.

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