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Treasury & Bond market review (weekly), after 2nd December, 2011.


European bond yields were showing improved behavior after that joint effort by central banks. Some experts now doubtful about the safe heaven tag of German Bunds after that last week episode. This week China again re-assured about the use of their $3.2 trillion foreign exchange reserve. These are not reflecting any improved condition for world economy.

Yields   ( USA)
2-Dec,2011
11/25/2011-12/2/2011 (%)
11/18/2011-11/25/2011 (%)




2-Year Treasury
0.252
-8.36
-2.48
5-Year Treasury
0.92
-1.39
1.85
10-Year Treasury
2.042
3.97
-1.94
30-Year Treasury
3.031
3.76
-2.43

Though Treasury Yields were flat but were better from last week, what I think that US treasuries are closely watching the fight between better US reports and bad news from Euro-area.



Treasury & Bond Market forecast for coming week

All the US Treasury Yields are following more or less same pattern. As I said in last day that they are following a trend line and now if they still follow that trend line then they will drop from these levels.
2-Year Treasury Yield was very flat in last few days of the week. It is still following the trend line, which I told in last week. It can break this trend line if it crosses 0.27 – 0.28 in coming days, otherwise it will drop from this level. In the upside if it breaks that trend line then it has resistance at 0.30 – 0.32 level.
5-Year Treasury Yield is very flat during few weeks. Last day I talked about the trend line for it, now if it crosses 1.10 level in coming days then it will break that trend line. Then in the upside 1.20 will be its immediate resistance, otherwise in the downside 0.80 will be its support.
Last week I told that 10-Year Treasury Yield can test 2.20 level in the upside, but it is getting resistance at 2.10 level. Now if it breaks 2.10 – 2.20 level in coming days then it will break the trend line. Therefore in the upside it can get immediate resistance at 2.30 level. In the downside it has support around 1.80 – 1.90 level.
I was expecting that 30-Year Treasury Yield may test 3.20 level but it got the resistance of 3.10. In coming days if it breaks 3.15 level then it will break the trend line, which I said in last day. If it breaks that then it will get resistance at 3.40. Other wise if it drops from here then it will get support at 2.80 level.
I am not sure about the long-term effect of that joint effort of central banks, so I will be watching how those Euro-are Bond Yields react in coming days. On the other side German chancellor dismissed any quick solutions for Euro-crisis; I have still doubt about Euro-are bonds which talked about during last few weeks.


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