mardi, juin 12, 2007

Bond markets - temporary blip or more turmoil?

The first chart is a monthly chart the bund future (in price) since the beginning of the 90's.
Technicaly speaking we had a sell signal in June 05 (double 13 arrow on chart).
This signal was later confirmed by a breakdown of a very important up-trendline in the beginning of this year.
This a very bearish chart and as you can see there is still downside potential as the target was not yet reached.
















If we zoom and take a look at the daily chart we can observe that the recent fall was very steep and that we are now approaching the target of the the bearish descending triangle.
Thus, on a short term basis bonds are oversold and may be due for a bounce in the coming days (or weeks) but on a long term basis the change in trend is likely
to continue and that is why I don't change my target of 4.85%(10 YR BUND YIELD) for the coming months.

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