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Treasury & Bond market review (weekly), after 23rd December, 2011.

Was that ECB’s QE for Euro-zone!  Euro leaders are expecting that their cheaper loan to different Euro-zone banks for 3 years will reduce the Bond Yields of PIIGs countries. I think this may be a lifeline for Euro-zone problematic banks as it will support the bank’s liquidity problem and will also reduce some amount of renewed tension in credit market.

12/16/2011-12/23/2011 (%)
12/9/2011-12/16/2011 (%)

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

US Treasury Yields went higher this week as a result of better news from Euro-zone and signs of improving US economy. It is good to see 10-Year Treasury Yield at 2.00 level.

Treasury & Bond Market forecast for coming week

Most of the US Treasuries Yields are close to break the lower high and lower low pattern and look like some are even out of it. In the coming week it will be more clear as better economic events and year end adjustments are permitting such movements. Thin volume can be a problem in coming days.
2-Year Treasury Yield broke the crucial 0.245-0.25 level, now 0.30 is an important resistance for it. If it breaks that then it can test 0.45 level. In the downside it has a support at around 0.22.
5-Year Treasury Yield is not completely out of the pattern yet like the 2-Year Treasury Yield. But it is sure that if things go this way then it will be, thereafter crucial level for it will be 1.2. In the downside it has support at 0.80.
Like 5-Year Treasury Yield, 10-Year Treasury Yield is close to break the crucial level of 2.00. If it carries this momentum then it will find resistance at around 2.30-2.40. In the downside it has support at around 1.75-1.80 levels.
Story is also same for 30-Year Treasury Yield, it is hardly trying to come out of the lower high and lower low pattern. If it breaks that level then it will get resistance at 3.40. In the downside it has support at 2.80 level.

ECB is not allowed to buy Bonds from PIIGs countries, so they are choosing different indirect methods. This week’s cheaper loan may reduce the tension for couple of months. But still the ultimate problem is the liquidity. I was expecting some news about EURO-Bond, but still there is nothing.

NOTE :  Please see the disclaimer of this blog .


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