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Treasury & Bond market review (weekly), after 10th February, 2012.


German, Italian and Spanish Bonds showed mixed reaction this week. Actually the performances of Italian and Spanish Bonds were better since ECB offered unlimited cash to banks, this is also supported by lower Euro inter-bank offered rate. German Bunds reversed its position after 3 days as European finance ministers held back the rescue package of Greece.
In the last day of the week as stock markets around the world slid, so safe heavens like German Bunds and US Treasury gained.

YIELDs (US)
10th Feb, 2012
2/03/2011-2/10/2012 (%)
1/27/2011-2/03/2012 (%)




2-Year Treasury
0.274
17.09
8.84
5-Year Treasury
0.811
5.19
2.94
10-Year Treasury
1.974
2.65
1.58
30-Year Treasury
3.129
0.29
1.96

After couple of weeks US Treasury yield is showing two consecutive positive weeks. Though in the last day most of the US Treasury yields were different, but that was not enough to offset the selling of earlier days.



Treasury & Bond market forecast for coming week.

Somewhere I saw that Fitch ratings said that Greece will default even with the new package, it is sure that this new rescue package will give temporary relief to Greece. Market is getting nervous as we saw that Spanish Bond fell after the news of no disbursement for Greece. All hopes are now based on that crucial vote for austerity measures. What I think that things are not going to solve even good news comes from Greece, because there are lots of things in the basket.
Beside Euro zone news, operation Twist is going to create an impression on US Treasuries. Sometime I feel that if now Euro zone problem become worst then where these US Treasury yields will go! I think in this matter Germany may get a friend.

2-Year US Treasury Yield broke the upper boundary of 0.26 but it was unable to test 0.30. So if it goes up then it will try to test 0.30 level. In the contrary it may re-test its initial support of 0.26 and then 0.24. Looks like it is creating a channel which says it may be in between 0.21–0.28 range, if it follows that.
5-Year US Treasury Yield was unable to break 0.90, so if it goes up then it will test that level. Now 0.80 is a good initial support for it. If it breaks that then it will test 0.70 level in the downside. Look like it is creating a falling wedge, so I will be looking on it in future.
10-Year US Treasury Yield was close to test its resistance of 2.10 but in the last day things were different. If macro events improved then it may break 2.10 level and test higher levels. In the downside it has a good support at 1.70–1.80.
30-Year US Treasury Yield is unable to test 3.40 level. Looks like it is following a wedge during couple of weeks, which suggest that in coming weeks it may break-out. So if it follows that and as it is making small moves so it is expected that it will be in the range of around 3.00–3.30. Now if it negates that wedge then it has a support at 2.80 and a resistance at 3.40.

Everyone is looking for the outcomes of vote on austerity measures, but seeing the protesters and the European authorities it is becoming very hard to understand that whether we are really going to see any solution of Greece problems!
One of my friends told me that it will be good for rest of the Euro nations, if Greece leaves Euro-zone! I don’t know probably ECB knows the answer!


NOTE :  Please see the disclaimer of this blog. 

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