Bond Futures

August 13, 2013

U.S 10yr:

TECHNICAL:
The Grind higher we have been speaking about will halt for today as technical shift to a mild SHORT. The model is still mixed indicating this will not be a significant short as we are technically still well within Range Bound trading.

FUNDAMENTAL:

The sentiment has shifted to Risk On from the Asian session. With EU data likely to beat and possible inflationary proof data out in, UK Fixed Income could notch lower.

SUMMARY:

Tech & Fundmntl suggest Fixed Income will underperform today.

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:
Bunds should be on their back foot from the market open. All technicals indicators point to a move lower. On a daily a close near 142. would be important.

FUNDAMENTAL:

The sentiment has shifted to Risk On from the Asian session. With EU data likely to beat and possible inflationary proof data out in UK, Fixed Income could notch lower. Due be cautious around Merkel today as she has a way to spin conditions negative.

SUMMARY:

Tech & Fundmntl suggest Fixed Income will underperform today.

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!