Wednesday, January 27, 2010

Key Reversal May Mark TOP!!!

Notes and bonds rallied sharply on weaker than expected housing data on Wednesday. By day's end however, long-dated treasury securities like the 10 and 30 year instruments were down, closing the day's trading session at their lows. Probably lots of the move was a result of the Kansas City Fed President's disagreement with the rest of the board that interest rates should remain at low levels.

In evening trading, note futures are down 8 1/2 ticks while bond futures are off 14. This could the beginning of the end for the bond rally. We went short at 117-24 for the notes and were tempted earlier today to add on as the notes topped the 118 handle. But no additional trades were established.

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