Two more updates have been posted to this update
1. Spainish Yields break out satisfies Rule for Breakdown of EU
2. Italian BTP down to session lows
The auction today was important as Spain short term auctions had gone well but markets were waiting if banks would actually want to give money to spain for 10 years. But they came stellar in the auction (not in absolute but in relative sense). Why would they not? Banks didnt care really did they? Its free LTRO money which is being rotated for 6% yields.
Although borrowing costs have been creeping higher in recent times, the yield of the 10-year now sits back below the 6% mark, and the fall in price of the Spanish benchmark since mid-Feb indicates a decent concession in today’s auction, offering investors the chance to buy paper at the highest outright yield levels since December.
The results:
- Sold Eur 1.12 bln of 3.3% 2014 Bono, cover 3.29( from 2.0), yield 3.463% (from 3.495%)
- Sold Eur bln of 5.85% benchmark 2022 Obligacion bond, cover 2.42 (from 2.2), yield 5.743% (from 5.403%)
Markets will now look to other data esp the home series data from the US and Manufacturing index both of which should provide the flip to yen trades.
In updates and charts:
EURO SCHATZ the level to watch is 110.505 and 110.45 on the downside. SCHATZ has been ranging trading in this range since the beginning of April. EURO too has been range trading in the range between 1.3220 and 1.2995 with no bias visible in either direction. You can argue both cases here but the fact of the matter is that SCHATZ has refused to take out either levels on the upside or downside. Stochastics and vortex indicator are in the middle of no where and therefor the range trading may continue for some more time.
Without wanting to put my foot in the mouth, I still favor a strong breakout for SCHATZ over 110.5 and hence a breakdown for EU this week. It could happen today or tomorrow.
Bunds had a golden opportunity to make a double top in the short term at 139.5 but broke through. We clearly painted the importance of this level last week and now bund futures sit over 80 ticks above those
levels. Bunds are above NET Buy lines at 140.40. Stochastics are above buy zone and hence we maintain the bullish biases.
Stuck between the 50 and 100 ma on the hourly. The prices are lacking direction on the hourly but is well supported by the rising 200 ma on the hourly. The swing lines stand at 131.6 and the upper BB stand at 131.65.
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On the forex setups, I must point your
You need to be a member with us to read on….. Subs have access to all the market analysis (Copper,BDI, Gold, US treasury, EU bond markets) and FX setups which also feature our FX portfolio.
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- The April Live Trade Sheet
- The April Live Trade Room
- C3X Performance FX portfolio
- Key economic data and speaker list for this week can be found here:Economic calendar
- The Bond auction schedule can be found here: Bond schedule
Mark
Capital3x
