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Treasury & Bond market review (weekly), after 16th March, 2012.

I have a feeling that there is a global sell-off going on in Bond market. Most of the Government Bonds irrespective of their names are participating in this event, though things were not same in the first day of this week. German investor confidence report helped 10-year Bund yield to push up from 4 month low. Beside fiscal problem Spanish Note auction was good but Bond auction could be better. Italian and French Bond auctions were good.

YIELDs (US)
16th March, 2012
3/09/2011-3/16/2012 (%)
3/02/2011-3/09/2012 (%)




2-Year Treasury
0.365
15.50633
15.33
5-Year Treasury
1.116
24.69274
6.42
10-Year Treasury
2.294
13.00493
2.68
30-Year Treasury
3.407
7.172067
2.28

The story was also same for US Treasuries, especially due to disappointments related to QE-3 and for their improved economic reports. Most of the US Treasury yields performed after a while.



Treasury & Bond market forecast for coming week.

Movements in Bond market were quite extraordinary; as such I did not expect such a movement in my last week forecast. I think that these falls will continue if market can avoid the negatives like higher oil price.
Most of the US Treasury yield’s movement in last two days shows that it can still go more in the upside. Though these up movements show that they are in short-term over-bought zone, so we may see little correction. But as most of them are trying to make bullish patterns, so if that is true then we may see more sell-off in coming futur.

For 2-Year US Treasury Yield the break-out was good but it did not able to cross 0.35 –0.38 range which I said in last week. Now it has an initial support at around 0.35 area and if it breaks that then I will think about the levels where it was in last 6 months. If macro things continue then it has more chance to test 0.45 –0.50 levels.
5-Year US Treasury Yield has triggered the pattern which I said in my last week review, it worked perfectly according to that pattern. Last few day’s moves showed that it can go more, I have a feeling that it may get initial resistance at around 1.15 –1.20 level. If it reverses its position then it will get good support at level below 1.00. Though it is in very early stage but looks like that it is making another bullish pattern, if that is correct then it can go as long as 1.50–1.60 ranges.
By looking at its last week move I was little disappointed with 10-Year US Treasury Yield but now it is out of 1.80 –2.10 range. So now we can talk about new levels, though it performed less from others.
Like other Treasury yields it is also trying to make a bullish pattern, which says that it can go up to 2.80 –2.30 range. Now for that the important level is around 2.40 –2.50, though it may take some more time to act on that pattern. If we consider that it is moving in a range even then that level is very vital for it. If things go contrary then it may again test level below 2.10.
Last week I said that 30-Year US Treasury Yield can easily break 3.25 and even can test 3.40, as such it just got the resistance there. Technical indicators say that it is in little better condition than others. It is also forming a bullish pattern, which says that it can move up to around 4.00 level. The important level for it is around 3.50. It has initial resistance at around 3.20 level.

Situation in Euro zone is improving but fiscal situation of some of the countries are still a problem. It is still confusing to me that how the economy will improve with so many austerity measures!
Treasury and Bond prices are falling but I don’t understand why US banks and China have increased their US Treasury holdings in year 2012. Though things may be concluded differently for US banks if it is related to any Basel 111 norm.



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