Risks favor: Locking, as 200-day Moving Average looms overhead

Current Price of FNMA 6.0% Bond: $99.91, -12bp

When it comes to the Bond Market, the rule is that good news is bad news and vice versa. So a lousy Durable Goods Report is bad economic news, which should be good for Bonds. But Bond prices have actually worsened because the 200-day MA ceiling is too difficult to break. Durable Goods was reported at -4.9%, which was lower than expectations of -3.5%.

At 1pm ET today, the US Treasury will auction off $18 Billion in Two-year Notes and this additional Bond supply could add selling pressure.

Technically, the 200-day MA is a powerful ceiling by itself, but the 25-day MA is also close by, making this dual ceiling of resistance too tough to break. A locking stance is best, as it appears bonds will drift lower towards support at the 50-day MA, about 25bp below present levels.