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Treasury & Bond market review (weekly), after 6th January, 2012.


There is still confusion about the role of creditors in Greece, as many are expecting them to suffer a huge portion of their amount on Greece debt. Unless a large write-off comes from these creditors, Greece’s debt may jump to twice the size of their economy. But as looks like that Greece leaders may have to face bigger troubles in coming days for those further cuts and measures. On the other side higher yield of 10-Year Italian government Bonds is still a problem for them in this New Year, as in the last day it again went more than 7%.

US Treasury prices got some boost after remarks from some regional fed official but overall yields ended higher.

YIELDs (US)
6th Jan, 2012
12/30/2011-1/6/2012 (%)
12/23/2011-12/30/2011 (%)




2-Year Treasury
0.256
7.11
-15.25
5-Year Treasury
0.854
2.64
-15.36
10-Year Treasury
1.957
4.59
-7.69
30-Year Treasury
3.014
4.36
-5.71

The matter is that better economic reports from US are getting weaker against worse news from Euro area, as a result of that US treasuries are not performing what it wants to do.


Treasury & Bond market forecast for coming week.

What looks to me that most of the US Treasury Yields are trying to follow a trend which is different from past couple of weeks. As trend is showing upward movements for US Treasury yields in coming days. It will be very interesting to watch that who wins the battle between better US reports and worse news from Euro-area. But for Euro area Bond Yields, I don’t think that line is proper.

2-Year US treasury Yield getting some amount of resistance around 0.30 levels. It made some type of pattern, though it is not very clear. If it breaks this target in coming years then it may attempt to break 0.34 and then around 0.42 levels. In the downside it has chance to test up to its recent low around 0.15.
For 5-Year US Treasury Yield, I would say that it is still in the bearish pattern. But it can still do so if it breaks around 0.95 ranges. As chart pattern is saying that it has initial target at 1.00 and but good one is at 1.20. In the downside it has support at 0.75.
For 10-Year US Treasury Yield, it is not so clear that it broke the bearish trend. But if it goes higher level from this range then I will think differently. In the upside it may face resistance around 2.30-2.40 level, if it breaks that then it will make a pattern which can take it up to 3.00 levels. It has support around 1.70.
For 30-Year US Treasury Yield, I would say that it broke the bearish trend or it will do that clearly if it breaks 3.10 levels. Therefore it has a target at around 3.50 levels. It has a target in the downside at 2.70.

US treasury plans to sell$147bn bonds and other instruments in next week.

While Germany thinks that more measures and budgetary discipline can resolve this crisis, while many are thinking differently. Most of them are thinking about large funds, that is the need of the hour. What I feel that everyone is thinking about their own interest and this may be the difference when you compare between US and EU.


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