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August 21th, 2012
Treasury prices at times today actually managed a downside breakout on the charts and that seemed to be the result of a combination of events. Clearly declining Euro zone uncertainty provided the brunt of the selling pressure today in Treasuries but it is also possible that signs of increased Chinese money market liquidity provided an additional layer of pressure for Treasury prices. Ongoing gains in US equities and rising physical commodity prices added to the bear’s fundamental argument today even if the threat of inflation is difficult to rationalize in an uncertainty global economic environment. With the recent lows violated in September bonds, it is also possible that technically related selling pressure was present in the trade today.
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