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2 Feb 2015
Technical outlook for Treasuries – RBS
FXStreet (Barcelona) - Analysts at RBS share the technical and the trade setup for US 2s, 5s and 10s Treasuries.
Key Quotes
“Treasuries are mixed and keeping pace with Bunds after China's mfg. PMI fell to almost a 2.5yr low this weekend while China's bank lending data was weaker than expected.”
“Our overnight US rates flows were very light with some Asian central bank selling in the front end the only flow of note. Overnight inter-dealer Treasury volume (4pm to 6am) was just 71% of the 10-day average volume for the overnight session.”
“2s (0.468%)– Next major support doesn't emerge until ~0.80% where we found buyers back in the spring of 2011. Resistance seen at 0.40% where we'd close a gap left behind in late October. Daily momentum is mixed.”
“5s (1.185%)– Next major support comes in at 1.80% and just above. Nearby resistance lines up at ~1.155%. Daily momentum is mildly bullish.”
“10s (1.67%)–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 now bullish and back into overbought territory.”
“Live Trade: 2s5s10s (+22.5bps)– The butterfly has major support at ~52bps, the high in Late December and near the 2009 highs. Minor support comes in around 35bps. Minor resistance comes at 18bps. Major resistance and our price target over the medium term is 0bps, the February 2014 'flats'.”
“Daily momentum is still bullish while long-term, monthly momentum crossed bullishly (for the belly) on Friday for the first time since late 2013.”
Key Quotes
“Treasuries are mixed and keeping pace with Bunds after China's mfg. PMI fell to almost a 2.5yr low this weekend while China's bank lending data was weaker than expected.”
“Our overnight US rates flows were very light with some Asian central bank selling in the front end the only flow of note. Overnight inter-dealer Treasury volume (4pm to 6am) was just 71% of the 10-day average volume for the overnight session.”
“2s (0.468%)– Next major support doesn't emerge until ~0.80% where we found buyers back in the spring of 2011. Resistance seen at 0.40% where we'd close a gap left behind in late October. Daily momentum is mixed.”
“5s (1.185%)– Next major support comes in at 1.80% and just above. Nearby resistance lines up at ~1.155%. Daily momentum is mildly bullish.”
“10s (1.67%)–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 now bullish and back into overbought territory.”
“Live Trade: 2s5s10s (+22.5bps)– The butterfly has major support at ~52bps, the high in Late December and near the 2009 highs. Minor support comes in around 35bps. Minor resistance comes at 18bps. Major resistance and our price target over the medium term is 0bps, the February 2014 'flats'.”
“Daily momentum is still bullish while long-term, monthly momentum crossed bullishly (for the belly) on Friday for the first time since late 2013.”