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Treasury & Bond market review (weekly), after 5th April, 2012.

Contagion fear is still working on Euro zone; suddenly market is focusing more on Spain. Its unemployment figure created doubt about controlling budgetary deficit. Spain’s Bond auction could be better this week; as such we saw higher Bond & Note yields this week for countries like Italy, Spain.

YIELDs (US)
5th April, 2012
3/30/2011-4/5/2012 (%)
3/23/2011-3/30/2012 (%)




2-Year Treasury
0.343
2.39
-5.37
5-Year Treasury
1.007
-3.08
-4.15
10-Year Treasury
2.177
-1.67
-0.89
30-Year Treasury
3.328
-0.39
0.97

US Treasuries were mixed this week, in early days it was manufacturing data and later Euro zone debt crisis were the ingredients. This week shorter-term US Treasury yields performed differently from longer versions.



Treasury & Bond market forecast for coming week.

Egan-Jones Ratings cut US credit rating due to its rising debt burden; I don’t think that is going to affect the market. But rate cut of any Euro zone nations may be bad for Bond market in coming days.

2-Year US Treasury Yield has not shown much movements, looks like that it may again try 0.32 levels in coming days. If it drops from there then it will get support around 0.28. If macro things improve then it may again re-test 0.40 levels.
5-Year US Treasury Yield is still moving around its support level of 0.95 –1.00, I think it may drop little more in coming days. I will be watching 0.85 –0.90 support level. I still feel that it is going to react on positive pattern which, I think that it is creating. If it breaks 0.70 then it will not react on that pattern. In the upside important level is 1.20 and I think it may trigger the bullish pattern if it breaks that range.
10-Year US Treasury Yield is still moving in last week’s level, I think it may drop little more in coming days but it may not drop like others. 2.05 –2.10 is important support level, if it breaks that then it will get support at 1.80 level. 2.30 is the initial resistance level for it. If we consider that it is making a bullish pattern then it needs to break 2.45 – 2.50 level. As I said in last week that it may take time to react on this pattern but I will change my opinion about that if it breaks 1.70 in the downside.
Situation in 30-Year US Treasury Yield is little better than others, I don’t know whether it is going to test its support level of 3.10–3.20 but it may test its initial support range of 3.25. I am positive about its pattern and I think it can go around 4.00 level, if it triggers this pattern. 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.



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