This week the US Treasury will flood the bond market with sales of short and long term bonds.
Energy traders will be very alert to bond buying coverage. Should the demand for bonds fall short of expectations, watch for the US dollar to continue its fall vs. the euro, paving the way for more gains on crude and refined products.
The bond sales by the US government are coming at a time when world wide equity markets are on the rise and general consensus has shifted to an improving world wide economy. This will further dampen demand for, "flight to safety," US bonds and cause bond yields to rise.
Investors will tend to favor the recent trend in allocating more funds to equities and commodities, seeking diversification to avoid certain inflation.
Energy investors should increase long positions on any pull backs.
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