Bad Day For Bond Bulls!
Treasury Bond futures fell sharply this afternoon, as funds moved out of government debt and into stocks following yesterday’s FOMC announcement. In addition, futures were under pressure after the auction of $13 billion in new 10-year Notes drew a higher-than-expected yield of 4.855%. Indirect bidders – including foreign central banks – bought a 32.1 percent of the total, which was below expectations. Technical traders noted the September Bond contract moved below the 100-day moving average, which spurred some additional long liquidation. 108-07 is seen as the next support point for September Bonds, with resistance now seen at 109-22. September Bonds closed at 108-30, down 1-08.
September Japanese Yen futures tumbled to 2-week lows, as traders unwound risk aversion trades. A rally in global stock markets after the Federal Reserve declaration of moderate growth expectations for the U.S. economy was the catalyst for large speculative traders to re-enter so called “carry trades,” which put pressure on low-yielding currencies such as the Yen. Sell-stops were seen triggered once the September contract moved below the 100-day moving average, adding further selling pressure on the afternoon. 0.8337 is seen as support for the September Yen, with resistance found at 0.8514. September Japanese Yen futures closed at 0.8403, down 0.0073.
