Technical Analyst, Saxo Bank Group
Very short term the Body gap on the Gilt Future between last weeks and this week’s candle should be observed. If it closed a larger rebound to 105-109 level could be seen i.e., a rebound to 0.618 retracement of the past couple of weeks sell-off and the 0.382 retracement of the past 12 months downtrend, with some resistance at 105. Strong resistance at 109.89. That level is key.
The current candle on weekly could be forming a Hammer (the Body of the candle must be at least twice the length of the lower shadow to become a Hammer, and no or very little upper shadow – similar picture on GBPUSD as described a couple of days ago).
If Gilt does not form a Hammer and does not close the gap selling pressure is likely to quickly resume pushing Gilt below 91 i.e., higher yields.
Bond. Long Bond(s)
With real rates being too positive, we see three scenarios: Opportunity to lock in rates at cycle high, government overreach to keep the economy afloat or a complete reset of the economy.
Steen Jakobsen,
Chief Investment Officer
Is a bond bull market ahead? Inflation still poses a risk for investors, but the moment for increasing duration to your portfolio may be approaching towards the end of the year, when central banks might be forced to cut interest rates.
Althea Spinozzi,
Senior Fixed Income Strategist
The furious rate hike cycle has brought gains in the US dollar, but with stagflation risks in Europe and the UK and weakness in the Chinese economy, USD may have more room to run. But a strong dollar could also have repercussions for US growth, emerging markets and commodity prices.
Charu Chanana,
Market Strategist
With the cost of capital rising painfully, stagflation fears are back, illuminating the fragile state of the green transformation, while giving a tailwind to nuclear power, and threatening the growth of AI-related stocks.
Peter Garnry,
Head of Equity Strategy
With supply tightness not only in energy but all commodities, the momentum in commodity prices may continue, pressuring central banks to lower real rates. That could be a good setup for precious metals, including gold, silver and potentially platinum as well.
Ole S. Hansen,
Head of Commodity Strategy
As the pandemic showed, even the US Treasury can experience seismic shifts. With the government increasing the pace of issuing bonds to support fiscal spending, the complex Treasury market and regulatory constraints could spark a liquidity event.
Redmond Wong,
Market Strategist
The tide has turned for bonds. Given the current yields, bonds have become an attractive investment, with added benefits including lower risk than stocks, increased diversification and a steady stream of income unaffected by economic changes.
Peter Siks,
Investment Coach
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