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Disappointing U.S. retail sales data is helping to underpin the December 30-Year U.S. Treasury Bonds this morning. The report demonstrates a sluggish third quarter economy. It shouldn’t however change the Fed’s mind about tapering its monthly monetary stimulus later in the month. It may however influence how much the central bank will cut.
Currently, the Fed is buying $85 billion per month in government bonds and mortgages. This new retail sales data along with the weak jobs data from earlier in the month could mean the Fed will reduce stimulus by only $10 to $15 billion as opposed to the previously expected $20 billion.
Daily December 30-Year Treasury BondsTechnically, T-Bonds found support in a short-term retracement zone at 129’07 to 129’00. The subsequent rally has the market in a position to test a major retracement zone at 130’03 to 130’18. A breakout over this zone could trigger an acceleration into a downtrending Gann angle at 130’24.
Because of the uncertainty over the Fed decision, the bias may be to the upside today and early next week ahead of the big Fed meeting on September 17 and 18.
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