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Week ended 29th July, 2011 – Treasuries & Bonds this week .


Yields
29th-July-2011
7/22/2011-7/29/2011
7/15/2011-7/22/2011




2-Year Treasury
0.356
-9.18%
10.11%
5-Year Treasury
1.351
-10.41%
4.57%
10-Year Treasury
2.795
-5.70%
2.03%
30-Year Treasury
4.128
-3.05%
0.28%

Right now what is happening in US relating to raising debt limit can be a good script for Hollywood movie. I was little bit astonished by the Treasury movements during last few days. This week Spain faced a possible downgrade by Moody’s because of the budgetary deficit and Moody’s cut Greece’s credit rating. Though Italian prime minister survived the confidence vote but bond yields are still rising in Italy with other nations of Euro-area. This week Moody’s cut Cyprus government bond by two notches. Bond yields in Japan rose a bit due to improve risk sentiments.





Coming week

Last day’s GDP report made lot of reflection in Treasury movement. I am little confuse about the Treasury movement in coming week, as such the situation in quite different.
I was doubtful about 10-Year Treasury Yield’s upward move above 3.00 level. But I was not comfortable with last day’s move as it broke and immediate short-term support of 2.872.
This week 2-Year Treasury Yield gets resistance at 0.44 level and in the later period of the week it was just finding support below 0.40. It’s previous support area of 0.356 is still intact. What I think that in coming days it can again test higher levels of 0.48.
Last day I was expecting that 5-Year Treasury Yield may test higher levels than 1.55, but it failed. In the downside it broke crucial support of 1.40. Now 1.30 is a support for it and in the upside 1.55 is still a resistance for it.
4.10 is still acting as good support for 30-Year Treasury Yield, as last day’s fall did not able to break it. I don’t think it is going to break it so easily. If things change then it may test 4.40 level.

Treasury will sell $51 billion of bills in next week.

Not only GDP report but other areas of US economy are not showing much of an improvement. What worried me is the fact that  I saw somewhere that, in last week investors Pulled large amount of money from money-market funds and in this nearly 70% redemption came from institutional funds which invest in US government securities. Now where these can go ?  some are saying that German stock funds and precious metal funds are the destinations, may be they are true, considering the economic scenarios.
But all of this can change if some better news comes from US regarding debt limit.



NOTE :  Please see the disclaimer below this blog



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