Analysis & Comment:
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The Monthly Banker: 5 March 2015
Chart of the Month: Recovery by the Euro 10yr Bond Yield...
At the end of February, the Euro 10-year Bond Yield plotted a record low level, at 0.283%. Subsequently, a failed break under the prior low occurred, leading to the current 'bear trap' recovery. That rally has now reached an interesting juncture; initial resistance around 4%. Note also the presence of downtrend resistance from the 50-day moving average close by. In the event of a push over that line, the next important chart resistance is near the 0.6% mark.
Government Bond Futures
US - The 10-year Treasury Bond future has retraced nearly all the small rally from the mid-February low at 126.375. A clearance of initial resistance at 128.391 is required to remove pressure from that floor. Should it fail to provide support, a short-term downtrend will emerge.
UK - This is what has happened to the Long Giltissue following the break under the mid-February low (117.92). A push to 120 would be needed to interrupt the downtrend, which points to potential support at the 200-day MA.
Europe - In early February, the Euribor instrument encountered support at 99.925, but only reversed the correction from the January overbought peak later in the month. There is obviously still resistance at that early-2015 high, at 100.015, as another reaction is currently underway. That said, in the absence of a downward dynamic, one cannot rule out a further challenge upon that pinnacle in the future.
Asia - The Australian 3-year Bond Continuationchart shows the price drifting from the early-February overbought high at 98.25. This is also the highest level drawn since 1995, when our records begin. However, a fall beneath initial support around 98; near the 50-day MA, would be needed to interrupt the upward tendency.