T-Bond trading comment (December 13, 2007)

Another bearish day and we are almost back at the 114 line... It served as a resistance area in the past, so it should serve as a support this time... In addition to that the T-bond seems to be overstreched to the downside in relative value ... But there is one thing not to forget before being outright bullish and that is CPI... Today, we had very strong retail and PPI numbers and if tomorrow follow the trend we will be lower again tomorrow night on the long bond.

The market was again very thin today as there is still a lot of incertitude about the economy. Overnight we brushed over more than one dollar wide before the numbers came in... They came in on the strong side. From there on it was just downhill with some very nice opportunities for short term trend followers... We had a fairly good day until we tried to test the
114-10/12 area for support after the 10Y auction... After an initial bounce, the market sold off on stronger equities and we just stayed stuffed with our longs... Need higher prices tomorrow or at least overnight as our targets are not too far on the upside.