Thursday, July 26, 2007

The Bond Market

Here are daily charts of the September T-bond futures, the yield on the 30 year treasury bond, and the yield on the 10 year treasury note. I last commented on the bond market here.
I think the drop in yields and the rally in futures which started in mid-June is over. There is strong resistance in the futures in the 109-16 to 110-00 zone. I think the 4.95% yield in the 30 year bond and the 4.85% yield in the 10 year note will be the lowest yields seen for the next few months.
I expect the futures to drop to the 103 level by mid-October and think the 30 year yield will advance to 5.60% and the 10 year yield to 5.50% during that time. After that I think a big drop in yields lasting a year or so will develop.

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