Oil Roils the Waters

November 27th, 2014 8:19 pm | by John Jansen |

OPEC decided to pass on cutting output and the result is dire in several places. Oil is an obvious victim as the price plummets. As I write this WTI is off $5.14 about 7 percent and trades at $68.57. The bigger victim is the Russian Ruble which has fallen off a cliff. Russia is an oil producer masquerading as a country and the currency which I marked Wednesday morning at 46.83 is trading at 49.18. That is about a 5 percent move for that currency.

The 10 year Treasury is approaching 2.20 percent and  that level is a Fibonacci retracement of the October 15 Squeeze low at 1.85 back to 2.40 trade. The next key level is 2.125 which is about a 50 percent retrace of the 2.40 to 1.85 range.

The Treasury yield curve is looking at this and saying that the Federal Reserve will be forced to delay its rate hike cycle. I am comparing to Wednesday morning and did not mark closes on Wednesday but 5s 30s has moved to 139.3 from 139.1. The 2s 5s 10s fly is 34.3 versus 35.1 on Wednesday morning. I had marked that spread at 41 as recently as Monday morning.



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