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Weekly Treasury & Bond market review after 14th October, 2011.


The world is waiting for some solution of the problems which originated in Euro-area. Everyone is expecting that leaders will get some solutions in coming days, but will it be that easy !
I don’t think so !  as I said in my past writing that if the problems in Greece die then there will be problems in Portugal or Spain. This week S&P cut Spain’s long-term credit rating which just reflects that, here we shouldn’t forget that Fitch also cut Spain’s rating in last week. So I think it will be better if leaders think about all problematic areas, otherwise it has no meaning. This week defeat of Slovakian government was little painful but looks like this type of fate is due for many. But good to see different situation in Italy, now Prime minister Berlusconi has more time to get Italy out of this debt crisis after that win in confidence vote.

30-Year US Treasury move was interesting this week. But shorter versions performed as expected. Both 10 & 30- Year Treasury Yields are heading for straight 3rd weekly losses.
Yields
14th-Oct, 2011
10/7/2011-10/14/2011
9/30/2011-10/7/2011




2-Year Treasury
0.269
-7.87
17.74%
5-Year Treasury
1,117
3.13
14.00%
10-Year Treasury
2.251
8.32
8.68%
30-Year Treasury
3.237
7.22
3.85%

Fed already started Bond purchase program but much effects have not seen on Treasury prices. This week I post a topic on shifting investment from precious metal to Treasuries (Investments are shifting from Gold & Silver to Treasuries !). Now as Treasury prices are falling, this may create new opportunity for buyers.


Treasury & Bond Market forecast for coming week

Spain’s credit rating cut may increase the cost of insuring European debt, we may see some rising spread between many top Euro-nations with German Bunds. But all those predictions are going to depend on the outcomes of the G-20 meeting.
I was expecting more up moves from 2-Year Treasury Yield, but it is getting some resistance at 3.00 level. Now 0.26 is a good support for it but it may test higher levels. Same type of movements were there for 5-Year Treasury Yield, 1.00 is a good support for it but it may also test higher levels.
This week, 10-Year Treasury Yield’s moves surprised me. It broke-out from a pattern of double bottom. Now if it breaks it’s resistance at 2.30 convincingly then it can test higher levels and on the downside 2.00 is good support for it.
30-Year Treasury Yield followed the 10-Year Treasury Yield, as look like it broke the lower lows and lower highs pattern by breaking 3.10 level, though it will be clear in coming days. Now it’s resistance is at 3.40 level and on the downside it has support at 3.00 level.
One of my friend was suspecting a line of discrimination between the rich and not so rich countries in the meeting, may be ! but I am not sure about it. Markets will get clear picture if leaders decide matters regarding write downs, private creditors contribution and also any matter related to collateral, if any.




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