Monday, June 22, 2009
The fear of higher interest rates is triggering adjustments in the markets overnight. This week the Treasury will auction a record $104 billion in notes. This huge amount of supply hitting the market is expected to help push yields higher.
Treasury Bonds and Treasury Notes are surprisingly trading higher overnight. The main trend is down so this may only be a corrective move against the main down trend. Unless these two markets take out a previous main top to turn the main trend to up, look for sellers to eventually step up in an attempt to drive these markets lower. All bets will be off on the short-side if the trend changes to up.
Foreign currency traders are buying the Dollar because of expectations of higher interest rates. This is basically a case of traders seeking a higher yield and not based on any economic news or expectation. Some traders are dumping more risky assets and buying the Dollar for safety. Others are position-evening ahead of the FOMC meeting on June 24th.
Equity traders have become …
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