30 Year T-Bond Futures Bottom-Out Above May 28 Lows

The 30 Year T-Bond futures sold off sharply again yesterday, yet managed to bottom out just above May 28 lows.  The 30 Year futures exercised their positive correlation with U.S. equities as the S&P futures busted out of May highs.  Investors are still concerned about the possibility of rising treasury yields dampening the current economic recovery.  U.S. home sales remain at discouraging levels, though we have seen positive signs in the housing market.  Investors fear climbing mortgage rates could discourage cash/credit strapped buyers from stabilizing housing.  In retrospect, mortgage rates are at historically attractive levels and investors shouldn’t be overly concerned, yet.

As we mentioned in our previous posts, treasury yields are at a critical juncture, and there is the possibility of a reversal in yield coincided with a bottom in the 30 Year and 10 Year futures.  However, we will need to see May 28 lows hold, with a climb above our 2^nd tier and 3^rd tier downtrend lines on substantial volume to consider a bottom.  If May 28 lows don’t hold, we could see the downtrend pick up speed once again.  Due to the lack of conviction to the upside, we maintain our bearish outlook trend wise on the 30 Year T-Bond futures.

Fundamentally, we find supports of 116.10, and 115.67.  To the topside we see resistances hanging at 116.75, 117.20, 117.69, 118.36, and 118.83.  The 30 Year T-Bond futures are currently trading at 116 24.0.

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