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Treasury & Bond market review (weekly), after 30th March, 2012.

This week it was Spain which continued the Euro zone show, its local election did not reflect much impression in Bond market but the general strike showed the challenges in front of their government. Their Bonds rose as they have passed their budget. This week, Italy’s Bond auction was good. German Bunds continued their gains this week in spite of better business confidence report in early days of the week. On the other hand it is good to see the change in German position about increasing the rescue funds for Euro zone.

YIELDs (US)
30th March, 2012
3/23/2011-3/30/2012 (%)
3/16/2011-3/23/2012 (%)




2-Year Treasury
0.335
-5.37
-3.01
5-Year Treasury
1.039
-4.15
-2.87
10-Year Treasury
2.214
-0.89
-2.62
30-Year Treasury
3.341
0.97
-2.88

Bernanke’s speech did not reflect much in US Treasury prices. This month US Treasuries saw one of the biggest monthly drops. The movement of 30-year US Treasury was different; I don’t know for sure that whether it is signaling some thing.




Treasury & Bond market forecast for coming week.

Market is going to react on the outcomes of finance minister’s talk for increasing the size of Euro zone bail-out fund. I think there is a feeling good factor working in the Bond market and that will be ultimately good for overall financial market. Since there are no new bad news is coming so it is expected that Bond market will continue their move in coming days.

2-Year US Treasury Yield was moving around its support level, if it drops from here then it will get support around 0.28. If macro things improve then it can again re-test higher levels.
5-Year US Treasury Yield got support at 0.95 –1.00 level, if it breaks that then next support level is at 0.80. Last week I was talking about the bullish pattern, which I feel that it is trying to make. Now if that is true then 5-Year US Treasury Yield 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.
10-Year US Treasury Yield got support at level above 2.15. Now 2.05 –2.10 is important support level, if it breaks that then it will get support at 1.80 level. In the upside 2.40 –2.50 is important range for it, 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.
30-Year US Treasury Yield stayed far above its support level of 3.10–3.20, so if it drops in coming days, I will be watching that level. 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 try 3.50 level in coming days.

Now market will be watching closely how Spain goes on with their budgetary measures. In spite of these I think Spain is in better place than many other PIIGS countries. In fact after Greek’s temporary solution gradually it looks like that we may see some light for Euro zone debt problems, though it is still too far.



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