2016/10/27 Quick Update: Govvies on the Move
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Quick Update: Thursday, October 27, 2016
Govvies on the Move
We are just back from our brief holiday during the early-mid part of this week, and the volatile movement has shifted into the govvies. On the other hand the equities remain as subdued as the past couple of weeks in spite of an upside flourish at the top of this week. This is interesting once again in the wake of the somewhat improved international economic data that is behind the yields moving up again (i.e. also government bonds coming under pressure.) After a brief December S&P 500 future push above the 2,141.50 interim congestion on Monday, lapsing back below the 2,136 Tolerance of that area on Tuesday’s Close was a clear indication that it is still more comfortable in the 2,141-2,120 range it had maintained since the October 11th pre-FOMC minutes failure into that area. And that still explains a lot about how the US equities can be under pressure in the face of improved data.
For more on the importance of the economic data relative to whether the Fed will actually hike in December see the Thursday October 13th evening Commentary: Fear of Fed…with a twist post. For the more extensive Evolutionary Trend View, see Market Observations in the lower section of last Friday morning’s Draghi a Bit Soggy post (that were updated after last Friday’s US Close.) In spite of the recent price movements, the levels and overall trend psychologies remain quite the same. That is even true for now pressurized govvies, where we articulated the key lower supports toward which they now seem headed. For your ease of access we will revisit those below.
And the one other area which had been in a very strong and even volatile trend at times is foreign exchange. Yet even though the US Dollar Index had rallied strongly, as noted previous that was substantially on the back of the weakness of the heavily weighted euro. The push back above the mid .9600 area opened the door to the test of the early February .9860 significant weekly channel DOWN Break it achieved on weak European data. Now that this has reversed, it remains a very important area that also relates closely to whether EUR/US can generally hold its 1.0850-00 support this side of 1.0500-1.0450.
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