US Bond Market Analysis

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Major financial markets are continuing on their budget and tax deal-induced behavior, with the MAR13 emini SP 500 futures contract up again today, this time trading up just above unchanged at +.15 percent.  The MAR13 emini Nasdaq is also positive today, trading up around 4 points, or +.16%. Many other commodities markets are quiet today. For example, gold and silver are slightly down on the day thus far, crude oil is hovering very close to unchanged levels from yesterday, and corn futures are also very close to unchanged levels.

However, there are a few commodities on the move today. Sugar futures continue their behavior which we deem as overall bearish. Sugar recently snapped below a very key 19 cent support level, but quickly rallied back above the level. Now, sugar is down 2.7% today, trading at 19.16 cents. Natural gas futures, after a brief consolidation, has gone down significantly over these past two days. Today, natural gas is down over 1%, trading at $3.20. To us, this level is a very important pivot level.

In addition to sugar, coffee and orange juice are also having relatively large down days. Coffee continues to hold below our key long term pivot level of 150. Coffee futures are down 1.54% today, trading at 147.10. Orange Juice futures, after a big wealther-related rally, has sold off rapidly from the key 1.40 level, and is now down 2% today, trading at 1.1425.

We focus our technical analysis on the US 30yr bond futures market for you. We notice that a downtrend channel resistance line has been forming since December. The market has been staying below this important line. Also, we see a very key resistance level just below the 149 mark, and we believe the market will stay below this level as long as the equity markets continue to rally. We see a highly significant support line at 145, and the market is approaching this key support with velocity. Our technical downside target is 143.

Tomorrow we have the huge non-farm payrolls report. If the number comes in very high, for example 250K or higher, we could see this target hit tomorrow or the following week.

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