US TNote Future – March 2010

Nicole Elliott from Mizuho Corporate Bank at 01/19/10

Comment: Benchmark yields have mercifully pulled back from pivotal trendline resistance and continue to unwind December’s (surprising) move. Yield curves remain (also surprisingly) steep. The futures contract is not overbought, has retraced just over 38% of its previous decline but still has a series of obstacles on the way up. Momentum is now decidedly bullish and consensus opinion is that ten-year TNotes should yield 4.20% at year-end. We continue to favour a rally to 118.00 this month and more later on.

Strategy: Buy at 117.10/117.00; stop below 116.00. Add to longs on a daily close above 117.24 for 118.00/118.15 short term.