- 1st decent positive (+162k) NFP since Dec07. While one swallow does not make a spring, one would have to be foolhardy NOT to assume Newton's 1st Law - a body in motion stays in motion etc, especially given the distinct improving trend on the NFP chart.
- Next FOMC meeting on 27-28Apr10. Plenty of time between now and then for market to fret over whether 0-0.25% interest rates are still appropriate. No brainer in guessing whether bond bulls or bears will be the nervous ones during the run-up.
- The time for a large short TY position is NOW, before the Fed event itself upon which the actual decision will prove or disprove market speculation. There will be plenty of opportunities to reduce (profitably) to more appropriate risk levels between now and Apr27.
- Longer term, assuming NFP does not turn back down, Fed tightening = higher US10YY. Delay in Fed tightening = higher US10YY on fears of Fed playing fire with inflation. (Bond bulls "skewed" either way).
- Purple circles on charts show fresh breakouts. On the monthly chart, there is a SHS bottom which has broken out of its NL. Objective of the SHS bottom is just below 6%. Stop loss on a monthly close back below 3.83%. [closed at 3.94%]
- The closest FX parallel to this is the USD/JPY. SHS bottom on weekly.
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