19 Dec 2014
US treasury 30y yields 35bp away from all-time yield lows – RBS
FXStreet (Barcelona) - The RBS Research Team observes that the 30y treasury bonds are only 35bp away from seeing all-time lows for bonds at around 2.50%, further noting that its daily momentum is strongly bearish.
Key Quotes
“The back end of the yield curve appears uniquely vulnerable to an overbought correction right now. At the end of the day on Wednesday the Treasury 5's-30's curve tested and swiftly rejected significant support at 111bp, a level derived by the tights in this curve in mid-2008 and then again at the start of 2009. I illustrate this support level in today's first chart while the second chart shows that daily momentum turned in favor of further steepening in the past few days.”
“The upshot is that those crowded into the long end of the curve may have some rough sledding in the coming weeks—perhaps failing to beat the forwards in their flattening trades or just losing money on outright longs in bonds.”
“With 30yr yields roughly 35bp away from the all-time yield lows in American history (2.50% in December 2008 and again in July 2012), it may be a good time for the longs in bonds to ask themselves what are playing for with 120bp of rally behind us and 35bp left before all-world resistance emerges.”
“5s (1.65%) – 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 bearish again.”
“10s (2.20%) –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 bearish.”
“30s (2.83%) – Bonds don't have any solid support until 3.105%, the November "lows." Next resistance is at ~2.50%, the all-time rate lows for bonds. Daily momentum is solidly bearish.”
Key Quotes
“The back end of the yield curve appears uniquely vulnerable to an overbought correction right now. At the end of the day on Wednesday the Treasury 5's-30's curve tested and swiftly rejected significant support at 111bp, a level derived by the tights in this curve in mid-2008 and then again at the start of 2009. I illustrate this support level in today's first chart while the second chart shows that daily momentum turned in favor of further steepening in the past few days.”
“The upshot is that those crowded into the long end of the curve may have some rough sledding in the coming weeks—perhaps failing to beat the forwards in their flattening trades or just losing money on outright longs in bonds.”
“With 30yr yields roughly 35bp away from the all-time yield lows in American history (2.50% in December 2008 and again in July 2012), it may be a good time for the longs in bonds to ask themselves what are playing for with 120bp of rally behind us and 35bp left before all-world resistance emerges.”
“5s (1.65%) – 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 bearish again.”
“10s (2.20%) –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 bearish.”
“30s (2.83%) – Bonds don't have any solid support until 3.105%, the November "lows." Next resistance is at ~2.50%, the all-time rate lows for bonds. Daily momentum is solidly bearish.”