Next Stop is Lower


By Bondsquawk

July 25, 2012

Even after reaching new all-time lows, yields are expected to decline further according to technical analysis from Credit Suisse’s research group.

After seeing a retest as expected, research analysts David Sneddon, Christopher Hine, Pamela McCloskey, and Cilline Bain wrote the following in their July 24, 2012 U.S. Fixed Income Daily regarding the yield on the 10-Year U.S. Treasury:

10yr US yields broke to new lows to test our downside interim trend objective at 1.40/39%. Selling has been found here. We allow for the corrective weakness to run further to trend and chart support now at 1.52/53%. We would look for buying here, but if overcome would then target range and 40-day moving average support at 1.55/58% which we look to hold.

Below 1.40/39% would see strength extend to target at 1.35%, then 1.25%. Bigger picture our core target remains at multi-decade channel and pattern targets at 1.13/11%.

Bond Trading – CS Technicals on 10-Year

Bond Trading – CS Technicals on 10-Year

For the 10-Year yield, resistance lies at the 1.11 to 1.13% range and the 1.40 to 1.41% area while support lies at 1.55 to 1.56% level and 1.73% point.

Their strategy for the 10-Year is to buy again should the yield back up to 1.52% with a Stop-Loss set at 1.53% with a short-term target of 1.40%.

As for the 30-Year U.S. Treasury, they expect resistance due to the yield running into the lower bound of the trend-line that started in the fall of last year to the early June 2012 low. However, they expect to see a breakout of this level with the potential for the yield to drop even further.

30yr US bonds yields have rallied from trend and chart support at 2.63/64%, just shy of channel resistance now at 2.45%. We look for this to hold initially. Direct extension through 2.45% would look on to longer-term targets at 2.25/2.20% with our main target at 2.12/10%.

Support shows at 2.55% initially, but through 2.63/64% to ease immediate bullish risks for 2.67/68%. Only above 2.63/64% would aim trend and 40-day moving average support at 2.67% where we would look for buying.

Bond Trading – CS Technicals on 30-Year aka Long Bond

Stronger resistance for the Long Bond lies at the all-time low of 2.45% followed by 2.10-2.12%. Support can be found at 2.63 to 2.64% area followed by 2.695%.

For the Long Bond, their strategy is to buy again should the yield increase to 2.63% with a Stop-Loss at 2.68% and a yield target of 2.46%. They added that they added to an existing position at 2.51%.


Be sure to check out our popular Bond University if you like this post. In addition, check out this article posted in the Trading & Investing Strategies section for ways to enhance beyond buy and hold static strategies.

The above content is provided for educational and informational purposes only, does not constitute a recommendation to enter in any securities transactions or to engage in any of the investment strategies presented in such content, and does not represent the opinions of Bondsquawk or its employees.



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