Manufacturing A Rally
A slight drop in US manufacturing activity is kicking
T-bonds to the top of their recent range and lending a bullish slant to more
potential upside. The National Association of Purchasing Management’s index
showed manufacturing grew at a slower than expected pace in July rising 51.8.
The number was unchanged from the previous month and slightly less than analysts
expected. Slower economic growth is good for bonds because it reduces the
likelihood that the Fed will raise interest rates at its Aug. 22 meeting.
T-bonds are on the Momentum-5
List and have been indicating they could make a larger-than-expected move by
registering on the Multiple Days Low
Volatility List.
In an interesting development in the credit market,
TradingMarkets.com Bond Analyst Tony Crescenzi reported on the TradersWire that
"There is speculation in the bond market that the Treasury department will announce the elimination of 30-year bonds when they make their refunding
announcement tomorrow afternoon." This could also spur demand for 30 year
T-bonds as large institutions seeking to cover their long-term obligations
(30-year) will compete for a dwindling supply.
Orange juice is continuing to new lows after registering
on the Implosion-5 List.
Natural gas is staging a solid rally, up 3.3% and trading on the top of its
range. However, the chart is still heavy, depicting a head-and-shoulders top.
The September futures is trading at the fail safe line of the right shoulder, a
line that could help determine of the contract will base or decline.
