Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Bonds Aren’t Believing The Decent PMIs, Concerned About Coronavirus?

By FOREX.com (Joe Perry)BondsJan 26, 2020 07:04
uk.investing.com/analysis/bonds-arent-believing-the-decent-pmis-concerned-about-coronavirus-200437108
Bonds Aren’t Believing The Decent PMIs, Concerned About Coronavirus?
By FOREX.com (Joe Perry)   |  Jan 26, 2020 07:04
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Outside of the United States, flash PMIs were generally better than expected with only the EU Services and Composite dragged lower by strikes in France. And although in the US, the manufacturing PMI was weaker, both the services and composite PMI’s were better.

With that being said, 10-year Treasury Notes are up over 20 ticks today and stocks are currently lower. It appears that, although China is going through great lengths to contain the spread of the coronavirus, ahead of the weekend that markets aren’t taking any chances. A second case in the US was confirmed, this time in Chicago, and the markets don’t want to take any chances that more cases will be discovered over the weekend.

Buying bonds is considered a flight to safety. When there is uncertainty in the markets, traders sell stocks and buy bonds. The US 10-Year Treasury Note has been in a falling wedge since the beginning of October 2019. Prices broke out in early January, then pulled back to retest the downward sloping trendline of the wedge on January 8th. However, the trendline held and prices are on the move higher once again. Looking at the candles on a daily timeframe, we can see that the market has been nervous this week. Including today, 10 years have closed all 5 days this week (although there is still half a trading day left today). Today, price broke through the 50% retracement from the highs on October 4th to the lows of December 19th near 130 00. It is currently testing horizontal resistance near 130 06. Above here, resistance comes across at the 61.8% retracement level near 130 15. Horizontal resistance comes across at 131 06 before reaching the October 4th highs at 132 1.

10 Yr T Note Daily Chart
10 Yr T Note Daily Chart

10 Yr T Note 240 Min Chart
10 Yr T Note 240 Min Chart

On a 240-minute timeframe, as price was moving higher this week out of the falling wedge, it formed a series of higher highs and higher lows. The trendline below is the first level of support near 129 16. (Also pay attention to the RSI, as it has moved in to overbought territory, however is not yet diverging with price). Below that is the prior low at 128 29, and then the confluence of support near the downward sloping trendline on the daily and the 200 Day Moving Average near 128 10.

If there is positive news over the weekend concerning the containment of the coronavirus, 10 years may very well gap open lower on the reopen Monday morning (Sunday evening in US). However, if more cases are confirmed and there doesn’t seem to be much progress in reducing exposure to the virus, prices may continue to move higher.

Original Post

Bonds Aren’t Believing The Decent PMIs, Concerned About Coronavirus?
 

Related Articles

Jeroen Blokland
Bond Yields - Daily Sketch By Jeroen Blokland - Feb 16, 2021

Today’s Daily Sketch is again devoted to the outlook for bond yields. A couple of days ago I pointed out that the yield curve could steepen further. Today’s chart shows the nominal...

Bonds Aren’t Believing The Decent PMIs, Concerned About Coronavirus?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email