10 YEAR US Treasury Note
02 Nov

10 YEAR US Treasury Note

The embedded video will update you on the mid to longer-term technical structure currently playing out in the 10YR US T-Note futures. This market is regularly covered in my Monthly Futures Wrap, with the current October 2015 issue depicting a long-term, 7-year ascending channel-bottom presently at 124.250 that has held repeatedly over the last 18 months of trade. This long-term formation encapsulates the descending trend in longer-term interest rates since the 2008 financial implosion, one that continues so long as monthly settlements above the 124.250 formation remain a fact.

A simple trendline off the 2012 and early 2015 highs, currently at 129.315, managed to hold October highs, thus forming a narrowing wedge between it and the 124.250 channel-bottom. Holding below the 129.31.5 trend line – dropping to 129.270 in November, and to 129.225 in December – allows a retest over the next 3-5 months of the 124.250 channel-bottom, a formation capable of containing selling through 2016.

While not expected between now and the end of the year, a monthly settlement below the 124.250 formation, which rises to 124.300 in November, and to 125.030 in December, would signal a continued collapse into the 117.00 – 118.225 region over the following 8-12 months, an event that in my opinion would also run parallel with a series of Fed rate hikes, the 117.00 – 118.225 region able to absorb selling through the balance of the decade and a meaningful downside inflection point over the same time horizon.

That essentially covers the mid to longer-term downside scenarios. Given the continued state of a longer-term bull market above the 124.250 region, an upside violation over the next 3-5 months of 129.315 trendline resistance remains the more probable scenario. This trendline drops to 129.270 in November, and to 129.225 in December, with a monthly settlement above indicating upward continuation over the following 2-3 months into the 132.095 region, able to contain strength through 2016 and a meaningful upside acceleration point over the same time horizon. Meaning: a monthly settlement above the 132.095 channel-top, rising to 132.135 in November and to 132.175 in December, would indicate not only a retest within 3-5 months of the 135.155, 2012 high, but more than likely 12-18 months bullish continuation into the 140.250-141.25 region, this event likely to run parallel with a depressed interest rate environment likely to involve continued economic challenges within China, Europe, and even the US.

Stay tuned for more market analysis blogs and videos. They should become a weekly event by early 2016.

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