10y rates have seen a rise after seeing their historical lows. Since the housing markets went into correction, credit markets have started adjusting for new realities and consequently markets had seizure and Federal reserve had to become the ultimate buyer of the risk to bring markets to their normal levels. These actions have dragged 10yr rates to historical lows. But since then after some apparently known as green shoots, positive economic news and profits from financial sector has helped equity markets to recover globally. this sowed the seeds of recovery in investors minds and everybody started getting into the market. We have also witnessed during last two months housing sector has improved due to incentives like $8000 tax credit to first time buyers and very low mortgage rates. Improved consumer sentiment, lower job losses and finally the bankruptcy of GM and chrysler brought equity markets to new state. All these factors and rising treasury supply helped treasury rates to go up. From here where ....
Fundamentally speaking, treasury rates have further room to rise. Unless, some fed speaker insinuates about their support to low mortgage rates.
Technical analysis confirms the same mood. The candle chart shows a bearish trend formation. Due to some random cause there might be a chance for markets to rise (yieds fall) but atlease for this week treasuries are on the slide to fall
Better to initiate
short in 116 calls at 1-09 ticks. excluding comm and fees.
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