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Treasury & Bond market review (weekly), after 20th January, 2012.


Downgrades of these rating agencies are unable to create any new panic in the market; I think this is going to be a big achievement in year 2012. Early this week they were trying to continue the last week’s game, by downgrading EFSF, but looks like market is neglecting them as Euro zone Bond yields have not shown that reaction. Though some are seeing this as the contribution of ECB’s 3-year unlimited loans to Euro zone banks.

YIELDs (US)
20th Jan, 2012
1/13/2011-1/20/2012 (%)
1/6/2011-1/13/2012 (%)




2-Year Treasury
0.242
7.56
-12.11
5-Year Treasury
0.888
12.26
-7.38
10-Year Treasury
2.026
8.46
-4.55
30-Year Treasury
3.102
6.49
-3.35

US Treasuries lost some ground; 10 year US Treasury yield is again above 2.00. US Treasury yields were showing a volatile nature, one week they are up and then in next week they are down. This clearly reflects uncertainty.



Treasury & Bond market forecast for coming week.

Most of the US Treasury yields were in the higher side this week, but considering the last week’s rating downgrade it was little different. As I said in my last review that short to medium term outlook for yields may be upward, so looks like it is just doing that. For long term US Treasury yields, it looks to me that they are very close to break the bearish trend and some are in fact break that. But same may take time for short-term US Treasury yields. German Bund yields are not performing like others, this is quite interesting.

For 2-Year US treasury Yield in short-run, 0.26 is important level in the upside and 0.22 in downside. Unless it is coming out of these ranges, it is hard for it to make a new trend.
5-Year US Treasury Yield was trying to test level above 0.95. In coming days if it continues these moves then it can easily test 1.00 levels. In the downside it has a chance to test lower levels if it breaks 0.75.
10-Year US Treasury Yield is trying to make a new pattern by breaking the bearish trend which I talked during last couple of weeks. Now if it breaks around 2.10 levels then it can try to test 2.30-2.40 levels. In the downside the level that needs to watch is 1.80.
Last day I was expecting that 30-Year US Treasury Yield has a chance to drop but like others it rose. Now it is again trying to break the bearish trend which it is following during couple of months.  I think in coming days it may be out of that trend. In the downside it will be hard to break around 2.80 levels.

Market is still expecting good news from negotiation between Greek officials and private creditors. Though S&P removed its negative watch on EU, but market needs some concrete steps to end this crisis.




NOTE :  Please see the disclaimer of this blog.

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