S&P cut sovereign rating outlook of
, saying that Japanese debt load will increase with the reconstruction needs . It looks to me something different from Japanese government statement . As in last week Japanese government said that they will not issue bonds or takes money from market for the Emergency relief package they have declared in last week . Japan
Japanese bonds rose this week as industrial production fell due to natural disaster and central bank cut the forecast of economic growth for year ending March 2012 . Thursday Japanese 10-year yield decreases to one month low level .
Let see the U.S. Treasury yields this week –
Lower GDP rate & decreasing USD , made investors doubtful about
recovery . Value of Treasuries increased these week . Though yield of short-term Treasuries decreased much , but many were there looking for long-term Treasuries . U.S.
Last day I was talking about growing importance of German bonds over US Treasury , now if we compare them , German bund gave a loss of 1.7% this year and U.S. Treasuries gave 1% in return . In spite of that many are going to vote for German bunds for future , simple because of more security and lesser uncertainties . Up to few days ago investors were taking shelter under precious metal like Gold or under Government backed debt from risky investment options . But after this lower GDP in
and decreasing USD , many are going to evaluate their options , as such they are thinking Gold is better . U.S.
2-year Treasury Yield is finding resistance at around 0.66 , on the lower side in 0.55 it can face good support . At around 1.90 level 5-year Treasury gets good support and if it falls from this level then it can go as down as 1.5 level .
As I was talking last week about the support of 3.30 level for 10-year Treasury yield , last day it just closed below that level . If it closes more lower levels then it may try to test March low of 3.155 as immediate target . For 30-year Treasury support at 4.45 area has been broken , now it has a good support at around 4.1 level . Last few weeks I was talking about a pattern in 30-year Treasury now it is close to completion , let see how it goes from here .
Next week Treasury will sell $80 billion in bills .
Any rate rise will cause bond price to go lower , because bond holders will sell their existing bond for new higher yielding bonds . Since there is a growing expectation that interest rate will increase in future , right now this may be the next big thing for US Treasuries .
( For charts – www.financialcharts.blogspot.com )
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