Bond Futures Eur. Open

August 20, 2013

U.S 10yr:

TECHNICAL

Our model is Short today. We are in full short trending mode right now.Price Action indicators are short, our trend strength model has just passed into Strong territory, The Vol weighted MACD is Short and the Custom RSI is indicating a strong Short.

FUNDAMENTAL:

This model is Short with a Caution bias today. The trend is in place (SeptTaper etc....), however, our headlines news variable is interpreting the data as Risk Off.

SUMMARY:

Both models point towards maintaining the Short bias. One note of caution on the combined model is that there will be some volatility as we continue to march South.

Macro Theme:

Clearly the market will lean towards being SHORT the 10's knowing that the BIG TAPER is just months away. Remember the TAPER is new just as TARP was 5 years ago. Bonds caught a bid and stayed bid and since the Taper talk bonds have been largely offered and stayed that way and likely will. FED Talk is of course down playing the impact but for now the Macro Trend is clear - SHORT BIAS

Bunds:

TECHNICAL:

Our Model is Short again today. We are for now in a decent trending mode with more downside to give.

FUNDAMENTAL:

This Model is Short today. With Fed Taper Talk and the Bundesbank's anti Forward Guidance chatter yesterday Bunds look to have more to give.

SUMMARY:

Both Models suggest a Short is in play however, we caution only on the yield side. we will have more analysis later on that profile.

Macro Theme:

The ECB is out of tools. Their situation is precarious as recent data has bottomed out but not strong enough to turn the European recession around which means all they can do IS TALK DOWN RATES but TAKE NO ACTION!