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Week ended 8th April, 2011 – Treasuries & Bonds this week

In the early period of the week investors were demanding higher yields for holding 10-year Portuguese bonds over the German bund , because uncertainty increases as look like Moody’s  was making primary grounds for Portugal to go for bail-out . In Wednesday Portuguese prime minister said that he would ask for financial support from EU and  Mr. Trichet  confirmed that they will encourage Portuguese authority to ask for support . This type of situation reflects that Portugal is just one step away from bail-out fund .
Portugal has raised about 1billion Euros but they have to pay almost 2-3% more interest than what they have to pay if they raised it 1 month ago . This interest rate is too much for an economy which is not doing well but Government has no other way because a loan is due this month of about 4.2 billion Euros and another 4.9 billion in June .
Some good news for Spain as IMF sees not rescue help is needed for Spain . I think their decreasing bond yields show the reason .
On the other hand due to increase in interest rate  in EURO area and other causes Treasury yields are effected .


2-Year Treasury
5-Year Treasury
10-Year Treasury
30-Year Treasury

Long term treasury yields have increase much . 0.84 is acting as a resistance for 2-year treasury yields. Unless it crosses 0.85 it is hard to say any up further up move . For 5-year 2.32 is a resistance and unless it crosses 2.40 it is hard for any up move .

There were some resistance at around 3.50  for 10-year treasury note and it broke  it now it time to see if it crosses 3.75 convincingly .  Around 4.65 ,  30-year Treasury is facing resistance and it may come down from here but things will be different if it crosses 4.75 level .

In the initial day investor & trader in Treasury market were little bit confuse , because of confusion about economic stimulus and interest rate increase .  Next week Treasury is going to sell bond , notes , and bills worth $128 billion .
Japanese bond of around 7-year , was relatively cheap in comparing to other maturities , which attracts some foreign hedge funds . Japanese yield is heading higher due to speculation of issuance of new bond as investors are guessing from the comment of prime minister .
German bund fell for 3 weeks in a row , as it’s  10–year yield increases with other problematic countries like Greece and Portugal .
10-Year Portuguese bond yields rose 518 basis points over German bunds . Let compare others with German bunds , Greece is 938 basis point , Spain’s spread decrease to 178 basis point and Ireland’s spread reaches to 577 points .
So may be Portugal is in trouble now , but Greece is worse . They may need more help from rescue fund .

NOTE :  Please see the disclaimer below this blog .

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