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Week ended 24th June, 2011 – Treasuries & Bonds this week .

Now it is 11th straight weeks during which 2 & 5 –Year Treasurie are giving negative yields. This week Fitch warned that US credit rating would be put into negative watch, if they miss coupon payment due on 15th August. Fears about Euro-zone debt and US economic slowdown, prompting investors to take shelter in Treasuries. But market is not satisfied due to comments of Fed regarding future Quantitative easing.

In the early days of this week market, especially the European markets were fragile due to important vote of confidence in Greece & threat of FITCH to cut Greece’s credit rating if private lenders rollover their loans. Due to this Greece and Spain paid higher Yields to sell their short-term debt compare to earlier days. Now winning  this vote was crucial for Greece to receive the money for avoiding the default. Greek government now needs parliament approval next week for 78 billion Euros in budget cuts to save off default. With the win in confidence vote 10-Year Yield and Default Swaps in Greece dropped, but later in Thursday both increased regarding the meeting of European ministers in Brussels. Portuguese, Irish and even Spanish bonds yields increased during the later part of the week.

Japanese government  Bond Yield performed with the European problems as such when concern over Greece came, it went lower and later rose with the ease of concern. Demand for long dated Japanese government Debt was there due to absence of auction in next  2 weeks. There were some speculation that moneys will flow into the new bonds from those bonds which will be maturing this month. 10-Year Yield hit in it’s lowest level since November,2010, some experts are saying that it may struggle to break below 1% in coming weeks.

Coming week

Last week I was talking about some rise in 10-Year US Treasury Yield, this week it tried that but in the later days of the week it again dropped to lower levels. The crucial thing is it broke the support of 2.90 level, it is now in lowest level since November 2010. Now it’s new support level is 2.80, if it breaks it then it may can go as low as 2.40 level. On the upside it’s immediate resistance is at 3.10.
For 2-Year Treasury Yield, it’s previous low level was 0.332 in November, 2010. This time it may retest that level. For 5-Year Treasury, last day I talked about the support of 1.30, it closed above that. In coming days if things become bad it may retest it’s November, 2010 lows. On the upside it has a resistance at 1.70 level. (Week ended 24th June, 2011 – 2 & 5 Year Treasury Yields this week .)
Last day I was talking that 30-Year Treasury Yield is not reacting like other Treasury Yields. It is just above it’s 4.10 support level. This time I will again repeat that unless it breaks 4.50 resistance level, I do not expect any new rise in it.

In coming week Treasury is going to sell $174 billion in bills & notes.

Markets were disappointed by Fed comments. Though long-term US Treasury Yields are not showing much changes, like shorter ones. Sentiment is negative, because not only Greece but US problem is coming out in a big fashion. Everyone is waiting for some news from US about month of August. Most of the yields are in lower levels and some are making newer lows. Sometime it looks to me that after these long drops certain pull-backs are necessary, but the environment is not good for it.

NOTE :  Please see the disclaimer below this blog .

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