30 Jan 2015
Technical outlook for Treasuries – RBS
FXStreet (Barcelona) - William O'Donnell of RBS, gives the technical outlook for US treasuries, noting that the long-term technicals are still bullish.
Key Quotes
“One of our themes/trades has been in buying 5's/intermediates against the wings of the curve if you're a long term investor”
“Long term technicals are still bullish for the belly with a return to FLAT in 2s5s10s possible over the coming months (expected 3-6mo range +52bp to FLAT). Support for the belly gets progressively stronger as we approach the low 50bp area.”
“On Treasuries, long-term sellers/bears should remain patient but existing longs should use upticks to get flat since signs of long-term overbought conditions have emerged.”
“However, with 1yr bull trends still intact, it is still too early to establish shorts in US rates”
“2s (0.50%)– Next major support doesn't emerge until ~0.80% where we found buyers back in the spring of 2011. Resistance next up at ~0.40% where we'd close a gap left behind in late October. Daily momentum is mildly bearish.”
“ 10s (1.72%)– 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 mixed again.”
“30s (2.29%)– Bonds don't have any solid support until 3.105%, the November "lows." For bonds I'd say the next resistance to watch out for is in USH5 at 153-11, the all-time highs for front moth US futures traced out in July 2012. Daily momentum is mixed and still overbought.”
Key Quotes
“One of our themes/trades has been in buying 5's/intermediates against the wings of the curve if you're a long term investor”
“Long term technicals are still bullish for the belly with a return to FLAT in 2s5s10s possible over the coming months (expected 3-6mo range +52bp to FLAT). Support for the belly gets progressively stronger as we approach the low 50bp area.”
“On Treasuries, long-term sellers/bears should remain patient but existing longs should use upticks to get flat since signs of long-term overbought conditions have emerged.”
“However, with 1yr bull trends still intact, it is still too early to establish shorts in US rates”
“2s (0.50%)– Next major support doesn't emerge until ~0.80% where we found buyers back in the spring of 2011. Resistance next up at ~0.40% where we'd close a gap left behind in late October. Daily momentum is mildly bearish.”
“ 10s (1.72%)– 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 mixed again.”
“30s (2.29%)– Bonds don't have any solid support until 3.105%, the November "lows." For bonds I'd say the next resistance to watch out for is in USH5 at 153-11, the all-time highs for front moth US futures traced out in July 2012. Daily momentum is mixed and still overbought.”