T-Bonds are trading weaker this morning because of the firming equity markets and the $21 billion U.S. Treasury debt sale. There is also rising speculation that the Fed may be preparing to raise interest rates. On June 7th, Fed Chairman Bernanke said the Fed will hike before the economy returns to full employment.

Flight-to-safety buying drove June Treasury Bonds sharply higher. Thursday morning’s trading action took out the recent high at 124’16. Upside momentum seemed to be indicating that another surge was likely. The move in the T-Bonds looks more reactionary than speculative with investors taking their cues from the falling equity markets.

June Treasury Bonds closed sharply higher as equity markets collapsed and demand for safer assets increased. The rally early in the trading session sent yields plunging while triggering a breakout over the last main top at 121’05. T-Bonds began to break from the 121’14 high near the mid-session after triggering stops above the last main top at 121’05.

In light of the number of manufacturing and goods producing jobs lost in America over the past decade, it’s no wonder why many in Washington and on Main St. are clamoring for a trade and currency war with China. The raucous has grown so loud that Congress, Treasury and the Commerce department may soon be forced to declare China a currency manipulator.