US and Euro Government bonds not in festive mood
Kim Cramer Larsson
Technical Analyst, Saxo Bank
Government bonds has taken a hit over Christmas and New Year breaking out of corrective patterns and below key supports.
Further sell offs are likely across the board.
10 Year US T-Note broke bearish out of its symmetrical triangle like pattern taking out support at around USD130 with ease. Trough low – and rebound - from November didn’t offer any support whatsoever with sellers continuing the pressure today. RSI is back below 40 i.e. confirming bearish trend.
From the weekly chart we can see there is not support until at around USD128. RSI is below 40 testing the rising trend line . A close below can accelerate the selling pressure.
Similar picture on the US T-Bond. On weekly the T-Bond has broken out of a symmetrical triangle pattern and could be headed for the lowest level in the triangle at around USD 153. RSI is supporting the bearish move
Euro Bund. After breaking bearish out of its rising channel Euro Bund has continued its downwards move taking out the support at around EUR172.48 now trading below 55 SMA.
RSI is below 40 supporting the bearish mood which could extend to EUR 169.92 support on the short term.
On the weekly chart Euro Bunds formed a top and reversal candle over the Christmas week in the form of a Bearish Engulfing. RSI is bearish which indicates we could see soon see a test of 200 weekly SMA and possibly a test of the support at around EUR 167.61
Latest Market Insights
Outrageous Predictions 2023: The War Economy
- The constantly growing global need for energy drives the world's richest to huddle up and launch a R&D project in a size the world hasn't seen since the Manhattan Project gave the US the first atomic bomb.
French President Macron resignsThe political stalemate in France and the rise of Marie Le Pen following the 2022 elections corners President Macron, forcing him to give up on politics and resign from his position. At least for now.
Gold rockets to USD 3,000 as central banks fail on inflation mandateAs markets and central banks realise that the idea that inflation is transitory is wrong, and that prices will remain higher for longer, gold is sent through the roof, hitting a price tag of USD 3,000
EU Army forces EU down path to full unionWith continued challenges in the region and a US military that isn't aggressively enacting its former role as global policeman, the European Union agrees to create its own armed forces, bringing the whole region closer.
A country agrees to ban all meat production by 2030In an effort to become one of the global leaders on the path to net-zero emissions, one country decides to not only put a heavy tax on meat, but to ban domestic production entirely.
UK holds UnBrexit referendumFollowing a recession and domestic pressure, the United Kingdom is thrown into political turmoil that will end with a vote to wind back Brexit.
Widespread price controls are introduced to cap official inflationHistory tells us that with the war economy comes rationing and price controls. And this time is no different, as policymakers introduce strict price controls that lead to a range of unintended consequences.
OPEC+ & Chindia walk out of the IMF, agree to trade with new reserve assetSanctions against Russia have caused widespread turmoil due to US Dollar moves in countries across the globe that don't consider the US an ally. To relieve themselves from this, they leave the IMF and create a new reserve asset.
USDJPY fixed to the USD at 200 as Japan overhauls financial systemFollowing the challenges that faced the Japanese Yen in 2022, the Bank of Japan attempts to keep the currency from sliding. Unsuccessful on the long-term, Japan will launch a reset of its entire financial system.
Tax haven ban kills private equityWith the war economy comes an increased focus on national interests and sovereign nations' ability to assert themselves. In that regard, the OECD countries turn their attention on tax havens and pull the big guns out, banning them altogether.