Treasuries opened with bids this morning in what looks like a continuation of the recoveries which began last Tuesday for the 10-year and 30-year, though not so much for the 5-year.
From low yields posted the week before last, the charts of the various maturities look so different they may as well be unrelated markets. During that time the 5-year yield went up 17 bps and then went sideways in a 5-basis point range recovering just 28% retracement of the break. The 10-year yield rose 18 bps and then recovered 42% of its break, while the 30-year yield rose 17 bps and recovered 73% of its break.
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The 5-year closed better for the day and just off its low yield on Friday, but it closed nearly 2 bps above where it closed the previous week. It also spent the entire week above the channel, which had contained its yield back to September until a week ago Friday, so that channel is history.
The move up in yield from the week before followed by the sideways action last week looks bearish and will continue to unless it can trade back below 3.766.
The 10-year also finished the day better on Friday but also negative for the week, although it did make a lower high yield and a lower low yield for 3 straight days giving it a friendlier look. After spending the first 3 days above its yield channel it did manage to finish the week back within it on Friday, but for all intents and purposes that channel seems to be of no further use. A trade back below 4.204 would eliminate its most bearish of wave count.
The 30-year is in a world of its own, having closed better on Friday, like the 10-year having made lower high yields and lower low yields for 3 straight days, and it even finished better for the week after having printed its highest yield since September, so all positives.
Having only traded outside of its channel by less than 1 basis point the week before last, remaining in the channel all last week, and then trading 0.6 bps below the channel this morning, that channel might still be worth monitoring.
What I found most unusual was that looking at my primary screen after Friday, which shows 5, 10, and 30-year yields on 15-minute bar charts, I couldn't see any reason to want to be long the 5-year, or any reason to want to be short the 30-year, but one of those positions will probably prove to be terribly wrong.
Durable Goods Orders came out this morning stronger than expected, but Durables are never that important and this report was a month old. I'd look for mostly 2-sided trading between now and Wednesday afternoon's FOMC meeting.
