Key reversal day in the bond market!

The 10yr notes market made a big reversal today following the CPI data. And this move could continue following the US retail sales tomorrow as economists are expecting a downtick in US consumer spending. We are far from a reversal, but given the big “outside day” bullish reversal candle near key long term support near the 109’00 level, we could see a much bigger reversal unfold in the market.

Two days ago, the chart of the day was the USDCNH and the correlation of yields in the 10/30yr markets. If the above holds true, we could see a reversal lower in the USDCNH and perhaps the broad US Dollar market as well.

To be extra sure that a key reversal is developing, we would be looking for a move back above the 50dma which capped the rally on Friday, September 1st.

Blake Morrow

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Steve Voulgaridis