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Treasury & Bond market review (weekly), after 24th February, 2012.


So in March, 2012 we are not going to see the first sovereign debt default for Euro zone, does it means that we are going to see it later? May be!  But for now looks like that Bond markets are not satisfied with the outcomes, neither those people who are protesting in the streets of Greece.
Italian Bonds declined on Euro area service and manufacturing data, while German Bunds rose and it also got support from the shrinking German GDP figure, but things were different on business confidence data. As such 10-year Italian Bond gains for the 7 consecutive weeks. Demand for Spanish Bonds was better ahead of next week’s LTRO.

YIELDs (US)
24th Feb, 2012
2/17/2011-2/24/2012 (%)
2/10/2011-2/17/2012 (%)




2-Year Treasury
0.307
5.14
6.57
5-Year Treasury
0.892
3.48
6.29
10-Year Treasury
1.977
-1.15
1.32
30-Year Treasury
3.099
-1.37
0.42

US Treasury yields have not shown any different picture on that Greece show. After 3 weeks 10 & 30 year US Treasury yields showed weekly negative figures. As we know Fed is buying long-term US Treasuries.



Treasury & Bond market forecast for coming week.

ECB said that it did not purchase any Bond in last week, so I think that they are sensing some developments. I will be watching the Spanish and Italian Bonds in coming days considering the ECB’s loan operation.
Looking in the price of Oil and Euro zone matters I don’t think that we are going to see more up movements in Bond yields, in fact this week there were not much rise in US Treasury yields. But these Bonds yields are showing downtrend from long time, so at any point of time it may reverse those positions but now it may be not the perfect time for that.

2-Year US Treasury Yield is trying to cross 0.30, it has a target up to 0.45 level. As we know Fed is replacing short-term Treasuries so that also supports it. During couple of weeks 2-Year US Treasury Yield is following a rising trend so if it reverses its course, then 0.24 will be its support.
5-Year US Treasury Yield is trying to test 0.90 level, but it is not showing much movements in the upside. If we consider that 1.40 level is the medium term target for it then first it has to cross level around 1.20, but now it looks very hard. In the downside the immediate support level is at 0.80, if it breaks that then it may re-test 0.70 level.
Last 3 day’s move in 10-Year US Treasury Yield were not good, as such it is trying to negate the trend of breaking 2.10 level. In the downside it has a support at 1.90 level. During couple of months it is spending times in between 1.80 to 2.10 levels, so unless it comes out from that it is hard to say anything. Looks like someone is restricting its moves.
30-Year US Treasury Yield has initial support at 3.06 and the good one is at 2.90. In the upside the resistance level is at 3.40, I think even if it tests lower levels it has more chance to go in the upside. But this prediction may go contrary if Fed buys more long-term Treasuries.

Euro leaders may be pointing towards declining Bond yields of Spain and Italy as achievements that problems in Greece are not crossing the border but they must think about volatile Portuguese Bond market which is next after Greece.


NOTE :  Please see the disclaimer of this blog.

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