The Bottom For the 2 Year Treasury Note
Treasuries have continued to sell off as the Treasury market reprices both interest rate and inflation expectations. Recently, the yield curve has begun to steepen further, and the 2s – 10s inversion has gradually decreased. The longer end of the Treasury market has experienced a significant increase in supply due to Congress's spending increases and liquidation by foreign debt holders. So the question arises: Is this the bottom in for shorter-duration Treasuries, like two year notes?
The two-year Treasury note exhibits interesting technical features. Currently, major trend line resistance and the 50-day EMA have converged at the 101’15 level, serving as a significant resistance point for the two-year note. To gain more upside conviction, we would need to witness a break and close above this level.
A move higher is likely to coincide with softer economic data and inflation returning to the Fed's 2% target. Conversely, if we continue to observe economic strength and persistent inflation, major support will remain at the 101’03’5 level. A break and close below this level is likely to trigger additional liquidation.
While the market is currently undergoing a substantial repricing of longer-duration Treasuries, the two-year note (shorter duration) price change will be less susceptible to interest rate fluctuations. Using the CME Fed Watch tool is an excellent way for traders to monitor the bond market's current view of interest rate expectations
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs tradingview.com/cme/
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
The two-year Treasury note exhibits interesting technical features. Currently, major trend line resistance and the 50-day EMA have converged at the 101’15 level, serving as a significant resistance point for the two-year note. To gain more upside conviction, we would need to witness a break and close above this level.
A move higher is likely to coincide with softer economic data and inflation returning to the Fed's 2% target. Conversely, if we continue to observe economic strength and persistent inflation, major support will remain at the 101’03’5 level. A break and close below this level is likely to trigger additional liquidation.
While the market is currently undergoing a substantial repricing of longer-duration Treasuries, the two-year note (shorter duration) price change will be less susceptible to interest rate fluctuations. Using the CME Fed Watch tool is an excellent way for traders to monitor the bond market's current view of interest rate expectations
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs tradingview.com/cme/
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
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