Good Auction Demand Sends Treasury Bonds Higher
March Treasury Bonds surged to the upside and erased all of Wednesday’s losses following the weak U.S. economic reports. Traders reacted to the possibility of interest rates staying lower for a long-time. Today’s Treasury bond action also went off without a hitch, generating more interest in the long side of the market. The charts indicate the next upside objective is 117’14. Conditions could weaken again if 116’28 fails to hold as support.
Equity markets finished higher following the release of weaker than expected U.S. economic data. Stocks initially showed signs of weakness following higher than expected initial claims and a lower U.S. Retail Sales Report. Investors looked at the break as a buying opportunity. The strong close put the major indices in a position to close at new highs for the week.
The weaker Dollar is helped to support February Gold. Traders also appeared to have shaken off the negative news from China from earlier in the week. On Tuesday, China made a decision to raise reserve requirements. Traders believe this will lead to a drop in demand for commodities, causing gold to lose its appeal as a hedge against inflation. Technically, a new short-term range has been created at $1163.00 to $1118.50. This range creates a retracement zone at $1140.70 to $1146.00. Closing above this zone will put gold in a position to test the $1163.00 high again.
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