The strong upmove in the Lehman 20-Year T-note ETF (TLT) suggests that, notwithstanding this morning's strong Jobs Report, the bond market thinks that the economy is inherently weaker, and/or more vulnerable to the housing and credit crunch than most people think.

The chart of the 10-year Yield, which is the flip side of the TLTs, shows that the Yield structure has pressed to new lows at 4.28% on a day that the government reported a much stronger than expected jobs market! Either the bond vigilantes don't believe the labor report, or they are much more concerned about the "rolling and intensifying" credit crisis, or both! In any case, let's notice that a potentially massive top formation could be on the verge of cascading to the downside in what would have to be an indication of a very serious flight to safety into U.S. Treasury paper as protection against more and more fallout in the U.S. (and foreign) financial names. Taken cumulatively, such as situation could very well be creating perceptions of instability in the global banking system.



Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com, a real-time diary of his technical chart analysis and trading alerts on all major markets. For more of Mike Paulenoff, sign up for a free 15-Day trial to his MPTrader Diary by clicking here.