Back
23 Jan 2015
Overbought treasuries dragged along as investors rush for yields – RBS
FXStreet (Barcelona) - William O'Donnell of RBS, comments that the overbought treasury market has been dragged along as global investors rush to find yields in the safe haven sovereign markets, and further shares the key technical levels for treasuries.
Key Quotes
“Draghi delivered and it couldn't have been easy to forge a consensus out of competing or diverging interests. The results of his efforts have been impressive so far as EU market-based inflation expectations have spiked higher while deeply overbought EU core and peripheral markets have smartly extended gains.”
“Our overbought Treasury market has been dragged along as global investors rush to find yield before it disappears entirely in the safe haven sovereign markets. I've said before that overbought markets can stay that way longer than market bears can remain solvent and I use the analog of the Gold market (overbought for 9 years from 2002 to 2011) as proof of that.”
“I honestly have no clue if the much-needed correction to higher yields in Treasuries will be in the next 1-3 months (my base case) or the next 1-3 years.”
“The ripple effects of the ECB actions were immediate (Denmark, Switzerland) and now attention turns to Asia and Australia as the possible next shoes to drop/ease in these raging currency wars.“
“2s (0.49%)– 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 mixed and aimless.”
“10s (1.81%)–Next resistance comes in at 1+yr channel lows ~1.80% or roughly where we're opening again this morning. The 1.70% level is resistance after that. Next major support comes in way up ~2.40% with other major support at 2.66%. Daily momentum is back to mixed.”
Key Quotes
“Draghi delivered and it couldn't have been easy to forge a consensus out of competing or diverging interests. The results of his efforts have been impressive so far as EU market-based inflation expectations have spiked higher while deeply overbought EU core and peripheral markets have smartly extended gains.”
“Our overbought Treasury market has been dragged along as global investors rush to find yield before it disappears entirely in the safe haven sovereign markets. I've said before that overbought markets can stay that way longer than market bears can remain solvent and I use the analog of the Gold market (overbought for 9 years from 2002 to 2011) as proof of that.”
“I honestly have no clue if the much-needed correction to higher yields in Treasuries will be in the next 1-3 months (my base case) or the next 1-3 years.”
“The ripple effects of the ECB actions were immediate (Denmark, Switzerland) and now attention turns to Asia and Australia as the possible next shoes to drop/ease in these raging currency wars.“
“2s (0.49%)– 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 mixed and aimless.”
“10s (1.81%)–Next resistance comes in at 1+yr channel lows ~1.80% or roughly where we're opening again this morning. The 1.70% level is resistance after that. Next major support comes in way up ~2.40% with other major support at 2.66%. Daily momentum is back to mixed.”