I was talking earlier about safe haven flows into German Bunds.
From a technical perspective, German Bunds staged a key weekly reversal earlier this year. The market has recovered from firm support at 3.5%, which coincided with the 119.85-95 area. The market is trading around the 1.929% yield mark, having made a high in price around at the 1.838% yield mark today. The market has seen somewhat of a pullback from here, although remains well supported above the 2.00% mark, which coincides with the 136.80-137.00 area. As long as the market remains firmly below 2.0% yields, the market looks well set to continue to trade through to all time highs, although the nature of the price action may be choppy as we enter a phase of fresh price discovery around these record lows. Bears will need to target a break of the 136.18-26 level if they are to make any headway. Just to give some background, a close above the 2.0% yield level may then signal a further sharp deterioration in prices for those looking for a medium to long term swing in trend.
The Bund has backed off from the record highs today on the back of a lift in risk sentiment after the Swiss National Bank intervened on the Swiss Franc to peg it to 1.2000 to the Euro. The pull-back has been accelerated by the justification that the Bunds may have been a bit over stretched around the record levels. A healthy correction should set the market up for another challenge of the all time lows. The 2.00% yield mark will be key to determining whether the market can continue to remain well supported or if this recent rise over the last week was a panic blow out top. Over the last week we have seen the European debt issues come back to the fore of the markets ’ attention now that the key US data and Jackson Hole are out of the way with. Heading into the important ECB rate announcement and press conference on Thursday we may see a further deterioration of the Eurozone issues as the market puts pressure on the ECB to act.
From a technical perspective, German Bunds staged a key weekly reversal earlier this year. The market has recovered from firm support at 3.5%, which coincided with the 119.85-95 area. The market is trading around the 1.929% yield mark, having made a high in price around at the 1.838% yield mark today. The market has seen somewhat of a pullback from here, although remains well supported above the 2.00% mark, which coincides with the 136.80-137.00 area. As long as the market remains firmly below 2.0% yields, the market looks well set to continue to trade through to all time highs, although the nature of the price action may be choppy as we enter a phase of fresh price discovery around these record lows. Bears will need to target a break of the 136.18-26 level if they are to make any headway. Just to give some background, a close above the 2.0% yield level may then signal a further sharp deterioration in prices for those looking for a medium to long term swing in trend.
The Bund has backed off from the record highs today on the back of a lift in risk sentiment after the Swiss National Bank intervened on the Swiss Franc to peg it to 1.2000 to the Euro. The pull-back has been accelerated by the justification that the Bunds may have been a bit over stretched around the record levels. A healthy correction should set the market up for another challenge of the all time lows. The 2.00% yield mark will be key to determining whether the market can continue to remain well supported or if this recent rise over the last week was a panic blow out top. Over the last week we have seen the European debt issues come back to the fore of the markets ’ attention now that the key US data and Jackson Hole are out of the way with. Heading into the important ECB rate announcement and press conference on Thursday we may see a further deterioration of the Eurozone issues as the market puts pressure on the ECB to act.
