Technical outlook for treasuries, momentum remains bearish – RBS

FXStreet (Barcelona) - Research Analysts at RBS comment on the treasury market, and give the technical outlook for 2s, 5s and 10s treasuries.

Key Quotes

“Treasuries are modestly higher this morning as 'risk off' conditions (ex-US stocks!) linger after yesterday's ECB warning shot to Greece pushed Greek bank shares down as much as 23% overnight.”

“Treasuries spiked higher in Tokyo hours but gave back ground after the EU crossover when the EU raised their growth forecast and we hit a heavy slate of supply from Spain, France, Sweden and Finland (who tapped a 5yr at negative yields; a first for Europe).”

“The price action was very whippy, continuing that recent theme.”

“Our overnight retail flows were light despite pretty heavy screen volumes. We saw Asian real$ buying in 30yrs and nothing else of note. Overnight inter-dealer Treasury volume (4pm to 6am) was 119% of the 10-day average volume for the overnight session.”

“2s (0.508%)– 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 bearish.”

“5s (1.278%)– Next major support comes in at 1.80% and just above. Nearby resistance lines up at ~1.155%. Daily momentum is bearish.”

“10s (1.78%)–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 bearish.”