US: Short covering in the 10-year Treasury note futures market - BBH

Soft US economic data appears to have spurred short covering in the 10-year Treasury note futures market, explains Marc Chandler, Global Head of Currency Strategy at BBH.  

Key Quotes

“The bears covered nearly 90k previously sold futures contracts, which was roughly quarter of the gross short futures position.  The 10-year yield briefly dipped below 2.80%  but finished the week in near the middle of the 2.80%-2.90% range, which even if fray, remains in play.  Technical indicators are not generating a strong signal, though the rule of alternation would imply that since the lower end of the yield range held, market participants may now turn to test the upper end of the range.”

“At the start of last week, the S&P 500 had traded at its best level since gapping lower on February 2.  However, a potential key reversal (outside down day after making new highs for the move)on Tuesday saw follow-through selling over the next couple of sessions.  The market tried in vain to fill a downside gap from the higher opening on March 9.  The failure to fill the gap may have encouraged new buying before the weekend.  The technical indicators are mixed, but a break of 2735-2740 likely signal a test on 2700, if not 2650.”