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Treasury & Bond market review (weekly), after 23rdMarch, 2012.

Last week I was suspecting that higher oil price may change the picture but IMF comments, Chinese and Euro zone manufacturing contraction helped the Bond prices this week, whereas Greek parliamentary approval reduced it to some extent. Last week, I was thinking about global sell-off in Bond market but this week the situation was different to some extent and I think those were just liquidation of long positions. German 10-year Bunds gained this week, where as Bonds from countries like Spain showed different pictures.

YIELDs (US)
23rd March, 2012
3/16/2011-3/23/2012 (%)
3/09/2011-3/16/2012 (%)




2-Year Treasury
0.354
-3.01
15.51
5-Year Treasury
1.084
-2.87
24.69
10-Year Treasury
2.234
-2.62
13.01
30-Year Treasury
3.309
-2.88
7.17

Last week I said that US Treasuries are in short-term overbought zone but things changed this week. Long-term US Treasuries are showing negative weekly yield after 3 weeks.



Treasury & Bond market forecast for coming week.

One thing is sure that investor who bought Bonds & Treasuries in recent weeks with lower values, they are in better position, considering the huge amount of inflows in Bond mutual fund over recent years. There is a growing feeling in the market that big Emerging nations are also slowing down; this feeling gets support when remarks come from top companies. Situation is changing very quickly, so it is getting hard to predict the market.

I think 2 year US Treasury yields already acted on its pattern but longer-term US Treasury yields are due to act on their patterns which I think that they are making, they may take more times to act. There was a noise in the market that 30 year US Treasury yield drop below 200 dma, which suggest a change of trend. So if things move like this week then long-term US Treasury yields may not trigger those patterns.

2-Year US Treasury Yield is still holding 0.35 support level, now if somehow it breaks that then next support level is around 0.30. Though it tried 0.40 level in the upside but it came down sharply from that range, so if things remain in favor then it may try level above 0.40.
5-Year US Treasury Yield got the support exactly at around 1.20 which I mentioned in last week. Now as it is reversing its course in the later period of the week, I think it may get good support at around 0.95 –1.00 level. Last week I was talking about another bullish pattern, which I feel that it is trying to make. Now if that is true then it will not drop below 0.70 and if it triggers the pattern then it can go around 1.60 level. Though if things become good then I will be watching it to cross 1.20 level, there it can get resistance at around 1.40 level.
I was expecting that 10-Year US Treasury Yield may get more time to cross 2.40 –2.50 level. If we consider that it is making a pattern then it needs to break that level. I am still positive about that pattern and as I said in my last weekly review that it may take little time for it. I will change my opinion about this pattern if it breaks 1.70 in the downside. In the downside its immediate support is at 2.10 level and if it breaks that then it will get support at 1.80 level.
30-Year US Treasury Yield got the resistance around 3.40 range. I am positive about its pattern and I think it can go around 4.00 level if it triggers this pattern. It has support around 3.10 –3.20 level. I will change my opinion about the pattern only if it breaks 2.70 in the downside. If things become good for it, then it may break 3.50 level in coming days.


Market is not satisfied with the Greece bail-out and they are already thinking about the next bail-out and then there is a growing threat of same bail-out for Portugal too. Look like some one is working very hard to create Greek like situation for countries like Portugal. In coming week I will not be surprise if new downgrades come for these types of Euro zone countries. So things are still far to get any solution and in between this if slowdown problems from Emerging markets (Will Emerging nations create their own fixed income market?) also captured the ground then we have to conclude differently.




NOTE :  Please see the disclaimer below this blog.

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