Nov 4, 2004

Big Bond Number

In front of tomorrow's payroll report make sure you notice that the TLT is sitting on top of its uptrend line (that coincides with the 50 day moving average) from way back in June. The same is true of ten year yields (they are sitting beneath a downtrend and the 50 day). A bond sell off would be sharp, and a rise would make me think we are heading for new near term highs (maybe 3.60 10 yr yield). I would lean bearish myself because I think people are underestimating the economy' strength here and that the yield lows in late Sept. represented a deflation panic that set a bottom.

Lots of data next week with bond auctions and the FOMC meeting but I bet tomorrow's reaction around those technical levels sets the tone.

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