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The Market Word - 10 Year Treasury Notes

Published 12/01/2011, 03:03 PM
Updated 07/09/2023, 06:32 AM
The Market Word - 10 Year Treasury Notes

This week has given us a flip in the market as the European Central Bank, the Federal Reserve and other central banks of Britain, Canada, Japan and Switzerland reached an accord to offer dollar swap lines at 50 basis points beginning December 5th through early 2013! The move to make the dollar cheaper through a coordinated effort is thought to bring more global liquidity to the financial system. The move was thought to help with some of the contagion fears generated over the recent months.

International Monetary Fund (IMF) Managing Director Christine Lagarde has been visiting varied countries to gather further support. The IMF has experience and credibility to gather the nations and unite them under one cause. The IMF in the past has dealt with insolvencies in restructuring debt and aiding the ailing countries. However, they lacked the total funding to bailout the largest ailing economy, Italy. Italy has not sought a bailout from the IMF, but they perceive the need to be prepared to rescue any larger economies. The European Central Bank (ECB) has limitless funds, but is unable to breach the laws governing its powers.

The ECB has recently thought that a loan to the IMF to empower the fund may be a form of aid without a breach of their governing laws. The European Financial Stability Facility (EFSF) has been set-up specifically to manage the debt, but without the funding and power has not been mobilized really. The IMF has mentioned in the past that they may support or even host the EFSF!

The US as of late has reported economic data that is better than the moderate growth. The US private-sector ADP National Employment Report had reported 206,000 new jobs exceeding the 130,000 that analysts had forecast. This was the largest increase since December of 2010! The US Unemployment Report due out Friday has analyst’s forecasts coming in at 122,000 to 150,000 new jobs created. Today, the US Initial Jobless Claims increased by 6,000 individuals filing for unemployment benefits disappointing investors. The 402,000 is just above the crucial 400,000, which has the global community looking for further reports that may exceed the 400,000. US Institute for Supply Management Index of factory activity reported an increase to 52.7 from 50.8 the previous month. Anything over 50 is regarded as expansion.

US Retail Sales over last weekend hit $52.4 billion exceeding last year's $45 billion. US Construction Spending was up 0.8 % to the annual rate of $798.53 billion which exceeded analyst's expectations. The overall effect is a more optimistic view of the global economy and the return of the investment community to the risk assets and away from the safe-haven products such as the Treasuries!



Technically, the US 10 Year Treasury Notes are in sell mode on the Hourly and Daily Charts according to the Wilder's Parabolic SAR!

Sell March 10 Year T-Notes (ZNH12) at $129^10. If filled, sell ZNH12 at $130^10 Stop or sell ZNH12 at $124^10 Limit (Target). The risk on this trade is $1,000.00 plus fees and commissions. The profit potential is $5,000.00 less fees and commissions. The expiration is March 21st 2012!                       

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