March T-Bond futures have now closed for two consecutive weeks below the 145^02 midpoint support of the big downtrend shown. This is quite bearish, implying as it does that a further fall to 130^20 could lie ahead. Odds of this will shorten if and when the key low at 142^31 recorded in September 2014 gives way. If the 130^20 downside target is reached, it would correspond to an interest rate of about 3.74% on the 30-Year — up very dramatically from a current 3.13%. That would obviously have a very significant impact on a U.S. economy that has become dependent on ultra-low interest rates. CNBC’s panel of ‘experts,’ including Maria Bartiromo, said recently that rates above 3% would be no big deal, since the U.S. economy has survived rates well above 10% on long-term bonds. This is idiotic, since the high rates did not follow a period of extremely low rates such as we have had for the last decade. Rates above 4%, if not an even lower threshold, will crush the housing and auto sectors and set stocks falling so hard that last week’s big sell-off will look relatively mild in comparison. _______ UPDATE (Feb 13, 8:33 p.m.): I’ve grown unaccustomed to providing bullish updates for T-Bond futures, but the rally begun on Monday deserves our attention. The key hurdles lies just above, at the 145^01 midpoint pivot (click here for chart). If it is easily exceeded, that would shorten the odds of a further ascent to D=145^30. That’s where the real test will take place, since a quick move past it would suggest the rally is likely to get legs. _______UPDATE (Feb 14, 6:45 p.m.): So much for that rally. It got turned into a blip by today’s slide. _______ UPDATE (Feb 15, 9:35 p.m.): Set a screen alert for 146^13, since any rally that falls short of that mark will be just noise. ________ UPDATE (Feb 21, 6:40 p.m.): Given the clarity of the pattern shown, a tradable bounce from 142^10 seems very likely. If you bottom-fish, use a 142^12 bid, stop 142^07.________ UPDATE (11:39 p.m.): The bounce from four ticks above my 142^10 target has somewhat diminished the appeal of the trade. Cancel it, but we’ll take another look in the morning. _______ UPDATE (Feb 22, 11:08 p.m.): Despite the so-far weak rally, the 142^10 target remains valid in theory. You can bottom-fish there for a single contract using a 142^10 bid, stop 142^06. You’ll be on your own if the order fills (and yes, you can widen the stop by a few ticks if you can withstand the additional loss. _______ UPDATE (Feb 23, 7:34 a.m.): Bulls have extended the rally into a third day, marginally exceeding yesterday’s 143^19 peak. However, I’d need to see a print above 145^10 to become a true believer.
