26 Jan 2015
Avoid the volatility in US rates market – RBS
FXStreet (Barcelona) - Analysts at RBS suggest to stay out of this volatility in the US rates market, with technicals pointing towards short-term overbought conditions in the intermediate and the front end benchmarks, while the longer-term signals a somewhat bullish outlook.
Key Quotes
“Technical signals for intermediate and front end benchmarks are mixed with short term overbought conditions still evident while medium and longer-term signals guide somewhat bullishly. These conflicting signals are another reason why I think it best for real$ accounts to stay near their duration bogey and for levered money to look beyond the US rates markets for trend opportunities, as many of our levered accounts already have.”
“Indeed, Vladimir Putin once said, "The point of conservatism is not that it prevents movement forward and upward, but that it prevents movement backward and downward, into chaotic darkness and a return to a primitive state." Taking a cue from that spin on conservatism, I think it best to avoid the chaos [volatility] often witnessed at turning points in rates markets and instead stay solvent for that moment when our deeply overbought long end rates move forward and upward. So that's what I'll do, mind numbing as it is for this market-watcher.”
“2s (0.515%)– Next major support doesn't emerge until ~0.80% where we found buyers back in the spring of 2011. Resistance next up at ~0.40% where we'd close a gap left behind in late October. Daily momentum is mildly bearish.”
“10s (1.80%)–Next resistance comes in at 1+yr channel lows ~1.80% or roughly where we're opening again this morning. The 1.70% level is resistance after that. Next major support comes in way up ~2.40% with other major support at 2.66%. Daily momentum leans a bit bearish now.”
Key Quotes
“Technical signals for intermediate and front end benchmarks are mixed with short term overbought conditions still evident while medium and longer-term signals guide somewhat bullishly. These conflicting signals are another reason why I think it best for real$ accounts to stay near their duration bogey and for levered money to look beyond the US rates markets for trend opportunities, as many of our levered accounts already have.”
“Indeed, Vladimir Putin once said, "The point of conservatism is not that it prevents movement forward and upward, but that it prevents movement backward and downward, into chaotic darkness and a return to a primitive state." Taking a cue from that spin on conservatism, I think it best to avoid the chaos [volatility] often witnessed at turning points in rates markets and instead stay solvent for that moment when our deeply overbought long end rates move forward and upward. So that's what I'll do, mind numbing as it is for this market-watcher.”
“2s (0.515%)– Next major support doesn't emerge until ~0.80% where we found buyers back in the spring of 2011. Resistance next up at ~0.40% where we'd close a gap left behind in late October. Daily momentum is mildly bearish.”
“10s (1.80%)–Next resistance comes in at 1+yr channel lows ~1.80% or roughly where we're opening again this morning. The 1.70% level is resistance after that. Next major support comes in way up ~2.40% with other major support at 2.66%. Daily momentum leans a bit bearish now.”