Bonds Consolidate, Breakout Soon??

Bonds have consolidated as we have expected. We are seeing strong support at 130'19, and appear to be forming a flag pattern bounded by 130'07, and 131'02. The Kovach OBV is trending up slightly, suggesting a small bull bias. From here it could go either way. The Fed is discussing tightening, which would be bearish for bonds, but persistent risk off sentiment due to the Omicron strain could give ZN a lift, though it appears this may be priced in by now. We will see continued support from the upper and lower bounds of the range. Volatility has consolidated quite a bit so we expect a breakout either way potentially soon.

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Bonds broke out on renewed risk off sentiment and the selloff in stocks. ZN is currently testing 131'12, where it is likely to close the day. If not, 131'20 is the next target.