T-bond/T-note Spread: An ‘Add-On’ Trade Was Triggered

T-bond/T-note Spread

The blog is currently holding a short position in the June T-bond/T-note spread from the equivalent of approximately 35-08 (premium T-bonds).

The blog initiated an ‘add-on’ position on February 20th at the equivalent of approximately 32-30 (premium T-bonds).

The blog initiated a second ‘add-on’ position yesterday on May 20th at approximately 25-14.5 (premium T-bonds) when the June T-bond/T-note spread closed below the May 13th correction low. This new ‘add-on’ position will be liquidated on a two-consecutive day close above 27-24, which is just above the May 15th reaction high.

June T-bond T-note spread daily

June T-bond T-note spread daily

During this nearly four-month decline, the June T-bond/T-note spread has dropped about 35 full points from the record high. As the trend progressed favorably, ‘add-on’ setups gave traders opportunity to increase the position size. Adding to winning positions is the way to take full advantage of a trending market. With no price support seen until the spread drops another eleven full points from here, hopefully even more setups will come along.

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