Steve Miley

Tue, Sep 24

US Treasuries rally as “risk off” theme tries to return

US Treasuries rally as “risk off” theme tries to return

Heightened geopolitical pressures have continued through mid-September with tensions
high in the Middle east since the attacks on the Saudi Arabian oil plants and with the US-
China trade talks beginning to falter last week before they had even properly resumed.

Furthermore, at their meeting last week, the Federal Reserve did cut interest rates as
expected, but then indicated a “on hold” position, potentially into the end of the year.

This was seen as a slightly hawkish cut by many market participants and commentators.

The move since mid-September to more of a “risk off” scenario globally has been
highlighted by vulnerable stock markets, a move higher in the Japanese Yen and a rally in US Treasuries, with us spotlighting the US 10yr Note Future below.

US 10yr Note Future: Risks still higher

A strong Monday rally into the 130-13/145 resistance area, to reinforce Friday’s advance just
through the 129-30 resistance barrier, to further reject negative forces from the mid-
September plunge through multiple supports, keeping risks higher for Tuesday.
The mid-September surrender of 129-295 support produced an intermediate-term shift to


For Today:

* We see an upside bias for 130-08 and 130-135/145; break here aims for 130-20 and
maybe 130-265.

* But below 129-29/28 opens risk down to 129-185.
Intermediate-term Outlook - Downside Risks: We see a downside risk for 127-17.

* Lower target would be 126-05.

* What Changes This? Above 131-155 shifts the intermediate-term outlook back to neutral; above 132-13 is needed for an intermediate-term bull theme.


You can see more from Steve Miley, Academic Dean for the London School of Wealth Management and Kylin Prime Capital Senior Investment Advisor, on