13 Feb 2015
Technical outlook for treasuries – RBS
FXStreet (Barcelona) - John Briggs, Head of Cross Asset Strategy at RBS, shares the technical outlook for US treasuries and further comments on the US bond market, noting that investors should be wary aggressively buying into the 10yr notes.
Key Quotes
“As for Treasuries, Retail Sales yesterday put a floor under the US bond market, helping 10yr notes hold the optically important level of 2%. Also supportive was the 4bp rally in bunds (now reversing), outperforming the US on the day, but still helping US rates yesterday on the sovereign bond differential front.”
“The stability we are seeing here around 2%, as well as the selloff to date, has the near term charts starting to get to oversold conditions (but not there yet).”
“The market may continue to try to stabilize around 2%, and potentially even bounce (note daily momentum hasn't turned yet, just getting oversold). But if one believes the weekly charts, any upcoming rally may prove tough sledding.”
“In the least, investors should be wary about too aggressively buying into the rally (if it occurs), especially at resistance, for the rally may just be a near term bounce amidst more general bearish pressures."
“2s (0.64%)– Next major support doesn't emerge until ~0.80% where we found buyers back in the spring of 2011. Resistance seen at 0.40% where we'd close a gap left behind in late October. Daily momentum is mixed.”
“5s (1.52%)– Next major support comes in at 1.80% and just above. Nearby resistance lines up at ~1.155%. Daily momentum is bearish.”
“10s (2.01%)–Next major resistance comes in at ~1.60%, the May 2013 'lows'. Next support comes in ~2.40% with major support at 2.66% after that. Daily momentum is bearish.”
Key Quotes
“As for Treasuries, Retail Sales yesterday put a floor under the US bond market, helping 10yr notes hold the optically important level of 2%. Also supportive was the 4bp rally in bunds (now reversing), outperforming the US on the day, but still helping US rates yesterday on the sovereign bond differential front.”
“The stability we are seeing here around 2%, as well as the selloff to date, has the near term charts starting to get to oversold conditions (but not there yet).”
“The market may continue to try to stabilize around 2%, and potentially even bounce (note daily momentum hasn't turned yet, just getting oversold). But if one believes the weekly charts, any upcoming rally may prove tough sledding.”
“In the least, investors should be wary about too aggressively buying into the rally (if it occurs), especially at resistance, for the rally may just be a near term bounce amidst more general bearish pressures."
“2s (0.64%)– Next major support doesn't emerge until ~0.80% where we found buyers back in the spring of 2011. Resistance seen at 0.40% where we'd close a gap left behind in late October. Daily momentum is mixed.”
“5s (1.52%)– Next major support comes in at 1.80% and just above. Nearby resistance lines up at ~1.155%. Daily momentum is bearish.”
“10s (2.01%)–Next major resistance comes in at ~1.60%, the May 2013 'lows'. Next support comes in ~2.40% with major support at 2.66% after that. Daily momentum is bearish.”