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Week ended 6th May , 2011 – Treasury & Bond this week


Higher USD and lower Commodity prices and some bad economic news from Germany and US , help investors to go under the shelter of US Treasuries .


Yields
6th-May-2011
4/29/2011- 5/6/2011
4/22/2011- 4/29/2011




2-Year Treasury
0.548
-8.66%
-9.22%
5-Year Treasury
1.857
-5.59%
-6.77%
10-Year Treasury
3.147
-4.14%
-3.49%
30-Year Treasury
4.276
-2.61%
-1.83%



During this week most of these Treasuries rose and their  yields decrease . Short-term Treasury yields are falling more during last few weeks . In Friday Treasuries rose in spite of good news from Nonfarm payrolls , as there was a  news that Greece may consider leaving Euro Zone . 

 78 billion Euro bailout for Portugal was cheered by investors , but still it has to be endorsed by the opposition parties .
Spain sold 5-year Government bond of 3.35 billion Euro . Yield of these bond were below than secondary market yield levels . This really shows that situation in Spain is quite different from Portugal and Greece .


Germany is suggesting about rescheduling of debt for Greece but many other EU partners have different opinions as they are fearing this may cause different headlines in media that other countries will not pay their debts . Many are thinking that Greece cannot meet it’s funding needs of 30 billion Euro in 2012 from bond market . I think that time has come to seriously think about Greece as it’s bond yields are increasing fast . Somewhere I was reading that it’s  debt is forecast to climb to 159% of it’s  GDP in 2012 .
In Japan demand for government bond increases as yields decreases .


Coming week

2-year Treasury yield is getting support at 0.55 range , it has formed a bearish pattern . 5-year Treasury is looking for support around 1.8 level .10-year treasury has a good support at around 3.10 level .

During last 18 days yields for 10-year Treasury was down for 15 days , and it is down for straight  7 days . Things needed to be watched whether it breaks the 3.1 level . As I was talking during last few weeks that 30-year Treasury yield has formed a bearish pattern , this week it’s move proves the pattern as it gave lowest figure since December . But it’s move in the last day was quite interesting , as it decouples from others . Though it can go up to 4.1 level in the down side and if things worse then it can even touch 3.9 level .

Treasury will sell $72 billion in coming week .

Everyone is waiting to see how US raises it’s  $14.29 trillion debt limit in May 16, 2011 . If they don’t increase it by May 16, 2011 then they have to find other sources may be delaying payments in other areas . If they do not able to raise the limit then there is a chance of default and which can create another financial crisis .
So in this circumstances if market smell any type of uncertainties, Treasury prices will jump  .



NOTE :  Please see the disclaimer below this blog .




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