Interest Rate Roundup

Thursday, January 18, 2007

The latest "Technical Take" on bonds.

From time to time, I've thrown in a post on the technical backdrop in bonds -- what the charts are showing. I want to do so again today.
This chart shows the price action in long bond futures. You'll see that I've added some lines -- they represent Fibonacci retracement levels. If you know what these are, more power to you! If you don't, suffice it to say they are key technical levels ... places where buyers who use technical analysis may choose to "make a stand" and step up.
In the past month and a half, we've retraced, or given back, about half the rally we got off the June low in long bonds. This 50% retracement level could act as short-term technical support. We're also coming into a price level that held on several tests back in September and October.
None of this changes the big picture -- that the latest economic and inflation data clearly eliminate the chance of an imminent Fed rate cut. But I think it's worth looking at the technicals AND the fundamentals in any given market.


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