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Week ended 20th May, 2011 – Treasury & Bond this week.

IMF head, Strauss Kahn’s arrest not only created problem in French presidential race but many were suspecting that it would also hamper Greece plead for bail out money. This week Greek sovereign debt problem made investor to take shelter in the safety of  US Treasuries. As all the treasuries rose this week.
This week Greece was the news headlines of all the new journals. Things have started with Fitch, which cut Greece’s credit rating.  Greek banks get helps from ECB, who took Greek bonds as collateral for short-term loan is worried about its own balance sheet. As there is a concern that Greece may default, so ECB warned that it may stop the funding of Greek banks in the event of restructuring of Government debt. On the other hand French finance minister warned that Greece need to do more on public finances to avoid default. Yields of Greek 10–Year bond rose to 16.7%, as many are suspecting lot of things about Greek debt.

Situation in Spain is better from Greece as it sold 3.219 billion Euro Government bonds in Thursday. S&P lowered its outlook on Italy and suspected that it has a chance of downgrade in next two years because of slowing economic growth.

Coming week

2-Tear Treasury Notes rose for a 6th week as there is no sign of rate hike and bad economic news continues. For 2-Year Note 0.55 is acting as a good resistance. It made a bearish pattern so if 0.50 level is broken then it will drop more.  5-Year Note is also in its support level of 1.80 and if it breaks 1.70 then it will go more down.

10-Year Note yield broke its resistance at 3.20 and it is looking at near by support at  3.10, but I think better support is at 2.90. It has formed the bearish pattern and in coming days it can drop much. If it drops again then its crucial support is at 2.50 level. 30-Year Bond Yield found a good support at around 4.2 level and in coming days if it breaks that level then it will go to test 3.90 support level. Unless it breaks 4.4 resistance level it is wrong to expect more from it.

$99 billion Treasuries will be sold in next week.

The thing I don’t understand that, what is the contribution of Greece in world financial activities ?
Suppose if Greek  makes the default, then  there may be some effect on EURO. But now it is long that we know about these PIGS countries. Then why this new journals and all the experts are so worried about it, I think all are diverting our attention. The better thing that could be or better to say need to be  the headlines of news journals is,  what is next after QE-2?

NOTE :  Please see the disclaimer below this blog.

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