17 Dec 2014
Year-long treasury rally beginning to show maturity signs – RBS
FXStreet (Barcelona) - William O’Donnell of RBS, sees the year-long rally in treasuries signalling signs of maturity, with the 30yr bongs edging into overbought territory for the first time since summer of 2012.
Key Quotes
“I think the best way to think about Treasury prices is that the year-long rally is beginning to show signs of maturing. As mentioned yesterday, monthly momentum for 30yr bonds still aims bullishly but we're now edging into overbought territory for the first time since the summer of 2012 with 30yr yields just 22bp shy of the all-time rate lows scored back then.”
“Importantly, there are no signs yet that rates are poised to rotate higher and it may at least be a month or two before we see those key signals. A bearish cross in the monthly momentum oscillators is as good a sell signal as one can look/hope for as such an event would signal that the sellers have trumped the buyers for the first time in months.”
“So I wait for that from the sidelines, unwilling to chase the last basis points in a move that looks quite mature already. Take bond market gains on upticks and get neutral with an eye toward shifting to a more defensive/bearish stance once the price action tells us that the buyers are finally spent.”
“5s (1.55%)– Next support comes in at 1.70% (where we were Monday last week) and then it gets stronger at 1.80% and just above. First resistance emerges at 1.47% and then major resistance lines up at ~1.27%. Daily momentum is mixed this morning.”
“10s (2.09%)–Next resistance comes in at the flash crash lows ~1.86%. Next support comes in ~2.40% with major support at 2.66% after that. Daily momentum is mixed and into overbought territory.”
Key Quotes
“I think the best way to think about Treasury prices is that the year-long rally is beginning to show signs of maturing. As mentioned yesterday, monthly momentum for 30yr bonds still aims bullishly but we're now edging into overbought territory for the first time since the summer of 2012 with 30yr yields just 22bp shy of the all-time rate lows scored back then.”
“Importantly, there are no signs yet that rates are poised to rotate higher and it may at least be a month or two before we see those key signals. A bearish cross in the monthly momentum oscillators is as good a sell signal as one can look/hope for as such an event would signal that the sellers have trumped the buyers for the first time in months.”
“So I wait for that from the sidelines, unwilling to chase the last basis points in a move that looks quite mature already. Take bond market gains on upticks and get neutral with an eye toward shifting to a more defensive/bearish stance once the price action tells us that the buyers are finally spent.”
“5s (1.55%)– Next support comes in at 1.70% (where we were Monday last week) and then it gets stronger at 1.80% and just above. First resistance emerges at 1.47% and then major resistance lines up at ~1.27%. Daily momentum is mixed this morning.”
“10s (2.09%)–Next resistance comes in at the flash crash lows ~1.86%. Next support comes in ~2.40% with major support at 2.66% after that. Daily momentum is mixed and into overbought territory.”