04 April 2011

EU10YY : Watching 3.44%

  • 10 year Bunds closed at 3.37% last week, just 7 bp shy of a previous yield resistance level at 3.44%. The region around 3.40% is very significant as we tried to go above it many times in 2009 before finally failing big time and EU10YY collapsed from Jan10. The starting point of the collapse ...  3.44%.
  • Monthly : If 3.44% breaks, then 3.67% is initial target. But expect break will not come easily.
  • Weekly : Close above 3.34% = bearish bunds (price). Uptrend in yields is well formed.
  • Daily : Just busted out of big trading range 3.11%-3.34%. Assuming equidistant, upside target = 23 bp @ 3.57%.
  • Preliminary thoughts now is to sell into any post ECB rate hike profit taking rally. Will see.

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