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Treasury & Bond market review (weekly), after 13th April, 2012.

Market is terming the Euro zone debt problem as “renewed” debt problem; here I don’t understand the meaning of “renewed”. If someone thought that after Greece’s bail-out the entire problem will stop, then they are forgetting that during that time Portugal was also looking worse. I think that in post Greece bail-out period only Spain changes its position with Portugal. Italy’s Bond auction was good this week but German auction was different.
Lower demand in German Bund auction as well as speculation on US government auction effected US Treasuries in the middle of the week and in later part it was Chinese GDP data.

13th April, 2012
4/5/2012-4/13/2012 (%)
3/30/2012-4/5/2012 (%)

2-Year Treasury
5-Year Treasury
10-Year Treasury
30-Year Treasury

US Treasuries advance in the last day on speculation of Euro zone debt crisis and many of the long-term US Treasury yields were down for 4 consecutive weeks.

Treasury & Bond market forecast for coming week.

Cheap money from ECB helped the Bond market during last December to march this year but situation is different now at time when market is suffering from liquidity. If things go this way then market needs more stimulus. Rising yields may be a problem for PIIGS nations in coming days. most of the long-term US Treasury yield have created a gap in the upside, so I will be watching that in coming days.

Last week I was suspecting that if 2-Year US Treasury Yield drops from 0.32 level then it may get support around 0.28 level. It has a strong support around 0.22 level but before that it has to break 0.26 level. I think it may take time to break 0.26 range, in fact in later period I will not surprise if it tests higher levels may be around 0.30 level. If it breaks that then it will get resistance around 0.32 range.
5-Year US Treasury Yield test the 0.85 support level which I said in last week. It has a good support at around 0.80 and as I said in past week that if it breaks 0.70 then it will not react on that pattern which I mentioned in earlier weeks. I am still positive about that pattern which it can trigger if it breaks 1.20 in the upside. Here I must say that it has created a gap in the upside so in later periods of coming week it may go to fill up the gap. In the upside it has good resistance at 1.00 level.
Last week I said that 10-Year US Treasury Yield may drop more. But I think it may not test lower support level which is at 1.80 and here I must say that if it breaks 1.70 in the downside then I will change my opinion about the bullish pattern which I said during last few weeks. 10-Year US Treasury Yield may trigger that pattern if it breaks 2.45 –2.50 level. It also created a gap in the upside, so it is expected that 10-Year US Treasury Yield may try to fill up the gap in coming days.
30-Year US Treasury Yield has tested the lower support level which I said in last week, now it has a strong support at 3.05 level. Like others it also made a gap in the upside and it may try to fill up that gap in coming days. It has an initial resistance level at above 3.25 level. 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.

Some important questions come into my mind, first what is the net result of ECB’s cheap loans? I think those were not much successful. Then will ECB repeat it again!  Or will they go for government Bond purchase? I don’t know what they are going to do, but it is sure that they need to do more if market goes this way. Second question is, if Bond market deteriorates more then what will be the situation of those banks, who bought many toxic assets of those PIIGS nations?

NOTE :  Please see the disclaimer below this blog.


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