30-Yr U.S. Treasury Bonds (US) Futures Analysis – July 1, 2013

September 30-Year Treasury Bonds posted a small loss on Monday after trading in an inside range. This type of formation suggests impending volatility. Today’s reports failed to bring any excitement to the market as many traders may be sitting on the sidelines ahead of Thursday’s U.S. holiday and Friday’s U.S. Non-Farm Payrolls report.

On Monday, the Institute for Supply Management Index improved to 50.9% in June from 49.0% in May. Although this number indicates expansion, the employment portion of the report fell to 48.7% from 50.1% in June. This component of the report brought the focus back to employment which is the theme for the week. The weak employment showing may have been the reason why bonds were able to hold steady throughout the day.

T-Bonds have been supported since bottoming on June 24 at 133’04. The rally to 136’04 may have been triggered by technically oversold conditions or by the thought the Fed would refrain from unwinding its aggressive bond-buying program until after September. This date was largely priced into the market since the June 19 high at 139’27.

Technically, the market is straddling an uptrending Gann angle at 135’20 after breaking through a downtrending Gann angle at 135’12. This is a sign of strength.

Although there is an upside bias developing, the upside objective is only a 50% level at 137’00.

Low volume and thin trading conditions could either hold the market in a range over the next two days or trigger volatile moves. Traders have to be ready for both types of price action. Big institutional money usually takes this part of the week off ahead of the holiday and jobs data, meaning moves could be exaggerated.