Why South Africa is a waiting game
Although current market conditions provide relatively uninspiring opportunities for bond investors, looking further ahead, there may be pickings in South Africa’s sovereigns, but here, caution is the watchword.
The US 10-year T-Note broke bullishly out of its falling wedge formation, hitting $120 resistance earlier today. Currently it looks like it will close above here and if it does there's no resistance before the 121 – 121 12/32 area.
RSI has broken above 60 threshold and a close above this indicates bullish sentiment for the T-Note
If it drops back below as of close today it could drop all the way down to support at 119.
Medium-term (weekly chart)
A massive bullish engulfing pattern last week, a broken falling trend line and RSI divergence indicate higher levels, possibly around 121.
We've broken out of the triangle and now also the 200-day moving average. RSI is bullish and there seems to be room up to around the 163-164 area.
Euro bund with long-term falling trend line.
Source for all charts: Saxo Bank