June Treasury Bonds are trading sharply lower this morning. The newly proposed sweeping-aid package for the Euro Zone is helping to support the Euro and drive up demand for riskier assets. This is triggering a liquidation break in the Treasury futures markets. Last week nervous traders bought Treasury Bonds and Treasury Notes for protection in a flight-to-safety rally.
Based on the month-long range of 114’06 to 124’16, expectations are for this market to correction back to the retracement zone at 119’11 to 118’04. A break through 120’12 is likely to trigger an acceleration to the downside.
U.S. equity markets are trading sharply higher overnight following the announcement by the Euro Union to provide much needed financial aid to the troubled Euro Zone region. This bullish news helped bring assurances to traders that the policymakers are behind the Euro and willing to do what they can to instill confidence in the Euro.