June U.S. Treasury bond futures (ZBM25) present a value-buying opportunity on fresh price strength.
U.S. Treasury bond futures have been routed this week by speculation and rumors that the U.S. Treasury market has become unstable. Treasury bond and note futures prices have fallen dramatically. (Treasury prices and yields move in the opposite direction). Part of the selling pressure is due to speculation that China and Japan, which are major holders of U.S. Treasuries, have been unloading them amid the U.S. trade tariffs onslaught.
It’s my strong bias that all the rumors and hand-wringing regarding the stability of the U.S. Treasury market are way overblown.
Simply put, the smart people in the U.S. government know the U.S. Treasury market absolutely must remain viable and stable in order for the global financial system to operate effectively. Anything less could spell catastrophe for the world banking and financial system. I look for a big rebound in U.S. Treasury bond and Treasury note futures prices in the near term — possibly as soon as next week.
See on the daily bar chart for June U.S. Treasury bond futures that the recent big selloff in prices has put the market into oversold territory, according to the Relative Strength Index. Any RSI reading below 30.0 suggests a market is overdone on the downside and due for at least a corrective rebound.
A move in June Treasury bond futures above chart resistance at Friday’s high of 114 4/32 would become a buying opportunity. The upside price objective would be 120 even, or above. Technical support, for which to place a protective sell stop just below, is located at this week’s low of 111 17/32.
IMPORTANT NOTE: I am not a futures broker and do not manage any trading accounts other than my own personal account. It is my goal to point out to you potential trading opportunities. However, it is up to you to: (1) decide when and if you want to initiate any trades and (2) determine the size of any trades you may initiate. Any trades I discuss are hypothetical in nature.
Here is what the Commodity Futures Trading Commission (CFTC) has said about futures trading (and I agree 100%):
Trading commodity futures and options is not for everyone. IT IS A VOLATILE, COMPLEX AND RISKY BUSINESS. Before you invest any money in futures or options contracts, you should consider your financial experience, goals and financial resources, and know how much you can afford to lose above and beyond your initial payment to a broker. You should understand commodity futures and options contracts and your obligations in entering into those contracts. You should understand your exposure to risk and other aspects of trading by thoroughly reviewing the risk disclosure documents your broker is required to give you.
