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Treasury & Bond market review (weekly), after 2nd March, 2012.

S&P’s rating declaration was overshadowed by ECB’s loan episode. Though German Bund yields were lower in early days of the week but after LTRO, things were different and in the last day it was retail sales figure. Bond yields of problematic countries like Italy and Spain declined this week on the expectation that banks will use those ECB funds in buying these Bonds. Italian 2-year Notes yield dropped below 2.00%, while Spanish 2-year Notes gained for 11th day. Bond auctions were also good; volume was good in Spanish auction.
US Treasuries gained in the last day due to Euro zone problem and German retail sale report.

YIELDs (US)
2nd March, 2012
2/24/2011-3/02/2012 (%)
2/17/2011-2/24/2012 (%)




2-Year Treasury
0.274
-10.75
5.14
5-Year Treasury
0.841
-5.72
3.48
10-Year Treasury
1.977
0
-1.15
30-Year Treasury
3.108
0.29
-1.37

After 4 weeks, 2 & 5 year US Treasury yields are showing negative weekly closing. Consumer confidence and jobless data helped to reduce the US Treasury prices but Bond market was expecting much from Bernanke.




Treasury & Bond market forecast for coming week.

Mr. Monty said this week that worst may be past for Euro zone Bonds. I think we may see this declining Bond yield trend for now, because of the measures in Euro zone and better reports from US,  but obviously it will be different if any new thing comes-up.
I think during this year long-term US Treasury yields are showing a small rising trend, though that is not totally true for shorter versions. US Treasury yields are moving around a range and unless they come out from those levels, it is getting hard to predict about a new move.

Last week I was expecting that 2-Year US Treasury Yield may reverse its course and I think 0.30 is acting as a good resistance, which it failed to break during last 5 months. So it is better if we talk less about its next resistance, which is at 0.45. It is getting initial support at 0.27-0.28, if it breaks that then it will get support at 0.23-0.24.
5-Year US Treasury Yield is getting good amount of resistance at 0.90, so now that 1.20 target is very hard for it. There is more chance that it will test its immediate support of 0.80 and then 0.70.
As I said in last week that unless 10-Year US Treasury Yield is coming out of from the range of 1.80 – 2.10; it is very hard to start a new trend. During last 4 months it tried 7 to 8 times to break 2.10 but it failed. Now in coming days if it breaks 1.93 range then it will drop into more lower levels but if it stays above 1.93 then it will again test that 2.10 level.
30-Year US Treasury Yield bounced back from its initial support of 3.05 which I said in last week. Now in the upside it has a target up to 3.40 but considering the macro scenario I think that is too difficult for now, so it may test around 3.25 level. In the downside if it breaks 3.05 then it will test 2.90.

Still now it is better if we talk less about Greece. Their Bond yields are supporting the rating agencies, as such this week some market players got a support from Paul Krugman and so they are pricing that there will be a default.


NOTE :  Please see the disclaimer of this blog.

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