The recent rally of the 2-year Treasury has unfolded following Federal Reserve Chair Jerome Powell's shift toward a slightly dovish stance in the latest policy meeting. Powell's rhetoric emphasized the importance of proceeding cautiously with the path of interest rates, prompting a surge in demand and short covering in the bond market.
Against this backdrop, the persistent tightening of financial conditions has compounded concerns, with market participants closely monitoring the impact on economic growth. The rally in the 2-year Treasury reflects a repricing in the bond market, as traders and investors feel that the Fed is that closer to the end of this Quantitative Tightening cycle.
Moreover, the specter of shrinking disposable incomes has cast a shadow over consumer spending, exacerbating concerns about the sustainability of economic growth. As disposable incomes dwindle, consumers typically curtail their spending, potentially dampening overall economic activity.
As market participants navigate these uncertain waters, economic data will continue to be a headwind for Treasuries, and Equities.
When looking at the technicals of the 2 year Treasury, there is major support from 101 ‘2 – 101 ’10. A break and close below this level would likely be coupled with better than expected economic data, and higher than expected inflation numbers.
Major resistance was previously the trend line going back to the March 24th highs. After breaking and closing above this level, traders should look for a break and close above 101 ’25 to see further momentum.
Check out CME Group real-time data plans available on TradingView here: www.tradingview.com/cme/
Disclaimers:
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com/cme/
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
Against this backdrop, the persistent tightening of financial conditions has compounded concerns, with market participants closely monitoring the impact on economic growth. The rally in the 2-year Treasury reflects a repricing in the bond market, as traders and investors feel that the Fed is that closer to the end of this Quantitative Tightening cycle.
Moreover, the specter of shrinking disposable incomes has cast a shadow over consumer spending, exacerbating concerns about the sustainability of economic growth. As disposable incomes dwindle, consumers typically curtail their spending, potentially dampening overall economic activity.
As market participants navigate these uncertain waters, economic data will continue to be a headwind for Treasuries, and Equities.
When looking at the technicals of the 2 year Treasury, there is major support from 101 ‘2 – 101 ’10. A break and close below this level would likely be coupled with better than expected economic data, and higher than expected inflation numbers.
Major resistance was previously the trend line going back to the March 24th highs. After breaking and closing above this level, traders should look for a break and close above 101 ’25 to see further momentum.
Check out CME Group real-time data plans available on TradingView here: www.tradingview.com/cme/
Disclaimers:
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com/cme/
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.