US TNote Future – Dec 2009

Nicole Elliott from Mizuho Corporate Bank at 11/03/09

Comment: October’s correction lower was eventually stemmed by Fibonacci support and the rising Ichimoku ‘cloud’. This has put ten-year benchmark yields within a whisker of tackling the pivotal level at 3.28% (though five-year will probably lead on a break below 2.15%). We expect this to give way this month so that this futures contract rallies to a new contract high prior to delivery. Bullish pressure should increase if prices now hold above 118.00.

Strategy: Buy at 118.20/118.10; stop below 116.16. Add to longs on a daily close above 119.00 for 119.26 short term, then 121.00.