A Bond and Dollar Comment Today

With the breakdown of the June T-Bond chart a week ago we see a confirmed top in Bonds, a top that was reached as discussed previously in February at 166.

While there is a lot of discussion of whether or not this is a sign of a better economic situation, let me just say, I don’t think so.  My view is that at the elevated Bond price levels reached in February, Bonds became a proxy for paper asset inflation, not weak economic conditions.

Our view remains, Bonds are to expensive to own, and continued weak economic conditions will only provide price bounces for them.  We look for a near term price range on the June T-Bonds of 152 to 158.

Update after market opening:

The retail numbers announced this morning show more signs of weakness and maybe a macro clue to the FED that QE3 didn’t work.  What do they do now i.e. the FED and Market Players, well one thing is to blame the dollar, and I would suggest that the Global Central Bankers are working on this aspect now.  To me that means a move on the dollar down to the 92.5 area before weakness in Europe catches up.  This is the first downward test of the upside breakout last October at 86.0.

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