Skip to main content

Weekly Treasury & Bond market review after 7th October, 2011.

ECB will be giving loans to banks and it will resume purchase of covered bonds to encourage lending, these were some better news that gave investors some relief to go for riskier assets. Though Yields pared their gains after Fitch ratings cut the long-term ratings of Italy and Spain. In the early days of the week markets were in some pressure when news about delaying Greece’s next installment of bail-out money came. Previously I heard that Greece needs the money by middle of October to avoid defaults but now it rises to November. I am little confuse about this difference !

7th-Oct, 2011

2-Year Treasury
5-Year Treasury
10-Year Treasury
30-Year Treasury

Payrolls report was a big surprise for many. I don’t think Treasury market was anticipating that in advance, because many were expecting bad payrolls reports. Since stock markets were in better condition so it is quite natural that some investments will shift from Treasury market.

Treasury & Bond Market forecast for coming week

Considering the operation Twist, it is expected that buying will come to those long-term Treasuries but when it will come, I am not sure about that, since there are lot of times in hand.  For short term Treasuries it is expected that yield will rise in coming days.

2-Year Treasury Yield broke the resistance of 0.26 and now trying higher levels. If things remain same it is going to test higher levels in coming days. It’s next big resistance is around 0.36 level. Same thing is also true with 5-Year Treasury Yield, it’s next resistance is at around 1.20 area and if it breaks that then it’s big resistance is at 1.40 level. 1.00 is a good support for it.
Last week I was telling that 10 & 30- Year Treasury Yields are making quite similar type of patterns. This week 10-Year Treasury Yield broke the pattern of lower highs and lower lows. It’s move surprised me as I was expecting yields to go down considering the operation Twist. Now it’s good resistance is at 2.30 level, though it broke the pattern but I will not surprise if it again goes down in coming days.
30-Year Treasury Yield is still following that pattern of lower highs and lower lows, now if it breaks level around 3.10 in coming days then it will break the pattern. If it breaks the pattern then it’s next resistance is at 3.40 level.

Treasury will sell $66 billion in Notes and Bonds next week.

We cannot forget that Greece wouldn’t meet this year deficit targets and it is not a good news. They may get the bail-out money in November but that cannot remove the basic problems. Recently they are taking some bold steps which may give them something to cheer in future. But still there are lot of confusions about matters regarding losses to private sector creditors and disagreement between members.
I don’t think that sudden better payrolls report can sustain this flow towards risky asset, what really needs is the repetition of this type of better reports. It is sure that sudden change in weather will remove some fear about imminent recession in both side of the Atlantic but ultimately it will follow it’s own track.

NOTE :  Please see the disclaimer of this blog .


Popular posts from this blog

DAX forecast for coming week ended 15th March, 2013.

This week was very good for Dax, though it is getting resistance at 8100 range. Now it has a chance to test downside again. I think even if Dax tests lower levels, it has more chance to bounce back from around 7800 range and therefore it will again test upside.

On the other hand if it shows flat movements around 8000 range in initial days of the coming week then there is a chance that it may take a decisive call in later days. Considering the recent trends it has the chance to test higher levels may be around 8200 but that will be a very aggressive call after taking in to account the movement from last December. I will worry about the downside when Dax will be testing levels below 7600 ranges.
NOTE: Please see the disclaimer of this blog.

Fed’s rate hike Vs Sovereign rating up gradation

Financial market is very much worried about the rate hike in US, probably this is going to come in coming December. But I think that is not going to change much of the things. Even Fed hikes rate in December it will be not so much, because we are forgetting one thing that interest rate in US is around zero so even they hike rate by 0.25-50% basis points (at most) in this year that will not be enough cause for Dollars to change their locations around the world especially markets have already discounted this coming rate hike in US.

A new disaster is coming in EU banking sector, whom to blame, big Audit firms!

First I was thinking what should be the title of this posting? Will it be good if I write that big audit firms set the time for EU bank collapse! If someone is thinking that financial crisis is over then think twice because the coming EU banking crisis is no way less than 2008 financial crisis. The time bomb will explode at some point of time in future, the time has not yet set for it. In that tsunami, forget about the smaller if any major banks collapse then I will not be surprise.