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Weekly Treasury & Bond market review after 23rd September, 2011.


Many of us know about Newton’s  3rd law, every action has an equal opposite reaction. Now if we consider last week’s Chinese news about Italy is an action then this week downgrade was the reaction. This type of thing is quite expected. When talking about expectation, that must be high for Greek leaders after those austerity measures which they are taking.

Yields
23rd-Sep, 2011
9/16/2011-9/23/2011
9/9/2011-9/16/2011




2-Year Treasury
0.219
28.82%
0.59%
5-Year Treasury
0.859
-6.22%
13.93%
10-Year Treasury
1.826
-11.05%
3.63%
30-Year Treasury
2.895
-12.61%
2.09%

Fed’s announcement of buying long-term Treasuries (6 to 30 years) created more demand for these Treasuries, especially the 10 & 30 year versions. Their Yields declined more than others and their value especially the 30- Year Treasury was much this week.



Treasury & Bond Market forecast for coming week


Though in last day of this week things were different but I have doubt that things will be same in coming week too !  unless the Greek matters get some solution, this trend may continue. After that FED announcement I am sure that demand will be more for those long-term Treasuries, but market may see some profit booking in later periods.
As I said in past that there are not much to say about the supports of these Treasuries, as there are chances of making newer lows so we can now talk about their resistance. For short-term Treasuries, some selling may come in coming future.  2-Year Treasury Yield tried to test higher levels but it may get resistance around 0.26 level. This week 5-Year Treasury Yield gave a lower figure and in coming days if it rises more, then it will get resistance at 1.00 level. This week 10-year Treasury Yields fall more, now 2.00 level will act a new resistance for it. Yield of 30-Year Treasury also showed similar action like 10-Year Treasury Yield, for it 3.30 will be a new resistance but I think they may create more lows in coming days.

Greece is facing some tough times both inside and outside of their land, protesters are becoming more aggressive but figures from EU are more hopeful about Greece. Some clearance is also due about the setting up of permanent rescue fund. As I said in past that problems in Greece are effecting us due to ……. , where it’s contribution in world financial market is much less than the attraction it is getting now.
FED statement clears some doubt that problems in US are not improving, now it cannot be compared with Euro-area but definitely things are not good. Fed has already told that it will keep interest rate low up to 2013 and now the $400 billion package to reduce the long-term interest rate indicates another sign of that, Which clearly means that there is not much expectation up to that time.



NOTE :  Please see the disclaimer of this blog .



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