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Ten-year notes extend, China too. UK drops at Hog bottoming time

Ten year note futures made a bottom extension yesterday, a day after the same signal in five-year notes. This changes our view from 'neutral' to 'short-term buy' so we now advise buying some part of the US treasury curve. As usual, there will be more 'bang for the buck' at the longer end, so buying the thirty-year is the more adventurous approach, even though there has been no signal in that instrument. Charts:

5 and 10 yr notes

An alternative would be to buy some government bonds in the Eurozone. Again there are no signals to report but the constant presence of QE from the European central bank is a supportive influence. There is no such help in the US, so this may be the better play here - buy German Bunds or even Italian BTPs. They have already rallied a bit from a low made yesterday but there still seems to be some upward potential. Again, this is a short-term trade that may not warrant holding even for our usual three-week period. We will advise. Charts:

Bunds and BTPs

One of the Chinese stock indices made a top extension. This will probably mark the end of the rally that has been going on since August, which started with bottom extensions. Sell short if you have space, which we do not at the moment being already short the US, France, Italy and Spain.

The UK FTSE made a compression yesterday which is (so far) breaking down today. If this break is still intact by the close today (or any day soon) then this too will add weight to the bear case and the FTSE may be added to the list of instruments that may be sold short:

china and UK

Elsewhere, it is time to buy Hogs for those who are not inhibited by religious scruple. Live Hog futures made a bottom extension yesterday which should now end their recent drop.

Hog bottom