The 30 Year T-Bond futures posted incredible gains yesterday after the Federal Reserve decided to proceed with quantitative easing by injecting $300 Billion into U.S. Treasuries. Even though Bernanke stated the Fed will focus its accrual of Treasuries on the 5 and 10 Year Notes, the 30 Year was more than happy to participate in the incredible rally taking place.  In succession, the 30 Year futures have been jolted out of their downtrend, and are looking to head back north in a hurry.

The U.S. has taken care of the rising concern over excess supply to fund the government’s massive stimulus package.  Furthermore, the Feds are appeasing China by reassuring the East that their investment in U.S. debt will be a secure one.

Rate follows GBP in two-way action but holds better on the dip, support now above the 1.2950 area. Upside stops likely cleared in size and if the rate can close above 1.3380 more upside is due.

The S&P futures leapt to finish with more extraordinary gains after Housing Starts and Building Permits came in better than expected. Since the economic crisis was triggered by the downfall of the U. S. housing market, any uptick in residential construction serves as a strong catalyst to the upside.

However, the surprisingly optimistic number was driven by an increase in the construction of apartment buildings. With a staggering amount of foreclosures, there should be no shock that more families are opting to live in multi-bedroom apartments to weather the storm in residential and credit markets.

The 30 Year T-Bond futures headed lower yesterday, exercising their negative correlation with U. S. equities. However, the 30 Year futures have caught themselves just above March lows in an effort to `hold the fort' so to speak.

Despite the resilience of the 30 Year to stay within a reasonable range, the declining purchases of U. S. treasuries by China will weigh down on the futures for some time. China is running a lower trade surplus due to plummeting exports, resulting in declining foreign exchange reserves.