Moving onto the Spain 10yr, “there are clearly more risks implied towards the upside in yields following a strong rally. However, the present yields might be forming a double-bottom with targets of 6.35% onto 6.50%. As such, a pull back to 5.55% should be followed by a break towards the 6.06% level.” Bondar notes.
Finally, the US/Germany 10yr spread was deemed to have formed a bottom above the 10 bps support and still looks likely to get back to the 22 bps region, possibly 26/30 bps. A sustained break below 10 bps cancels this view.” he adds.