This post updates our Jan 27, 2015 Update on Bonds:

This morning’s unemployment report has sent yields soaring.  The reasoning is that stronger employment will cause a stronger/earlier rise in interest rates than the Fed would otherwise have planned.

From a chart standpoint, the 10-year yield is very overbought.  In other words, we’d be aggressive buyers of notes here at 1.95% (128’150) with stops at 127’185.

Note that TNX has again tagged the underside of the rising red channel channel…

…while prices (ZN) have tagged an important .618 Fib where it intersects with the .236 channel line.

We think this bounce is very overdone, and are sticking with our Jan 27 forecast of a late February target of 1.53-1.58.  The ideal date: around Feb 20.

Because a channel bottom backtest is involved, the stops are pretty obvious.  A strong move north of this morning’s highs (19.53) would be cause for reassessment.