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Analysis & Comment  > The Monthly Banker

The Monthly Banker: 1 October 2015
'Bull trap' fears for US 2yr Bond Yield


The 0.75% region had curtailed the advance by the US 2-year Bond Yield since late-December 2014.  When, in mid-September, the yield finally cleared that barrier, it quickly encountered resistance around 0.8%, to drop promptly back down again.  A sustained push over that level would be required to reinstate the advance towards the 2011 ceiling; and offset 'bull trap' scope for further easing over the near term towards the July/August floor around 0.55%.



Government Bond Futures 


US - In mid-September, the5-year Treasury Bondfuture encountered firm support at 119.148.  Since then, prices have rallied and now approach previous resistance at the August high at 120.781.  In the event of a clearance, next chart resistance is at 121, the high plotted on 2 February.


UK - The last rally from sideways support around 117 by the Long Gilt future managed to take the contract over the August high (119.34).  That said, however, the breakout has not been maintained, with the price stalling at 119.46.  A jump past that level would be needed to completely remove the risk of a 'bull trap' reaction, back towards the 117 region.

Europe - The latest reaction from the August high at 156.84 by the Euro 10-year Bund has been quickly reversed.  A fall under the September low at 152.75 is required to reaffirm resistance at that barrier.  A breakout will have the April pinnacle, at 160.62, to aim for.


Asia - The Australian 10-year Bond Continuationgraph shows support arriving at the 200-day MA in mid-September.  The ensuing rally is heading back to the August high near 97.5.  After that, next important chart barrier is around 97.8.

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