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Technical analysis: Euro-Bund Future

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Euro−Bund future – Dec 2009

Mon, Oct 5 2009, 08:18 GMT
by Nicole Elliott

Mizuho Corporate Bank


Comment: October brought with it a new mind-set in the Treasury market with yields slipping suddenly, benchmark ten-year Bunds moving towards 2005’s low yield of 3.00%, ahead of the all-time low 2.85% of January this year. Moving averages on the weekly yield chart have crossed to bearish and a massive Ichimoku ‘cloud’ should bear down on yields. We favour a re-test of the record low and a lot more yield curve flattening, so we could see a drop to 2.50% and maybe 2.25%. Note that some Eurozone index-linked paper is now trading at a record low yield of just 80 basis points (from 285 in October last year).

Strategy: Buy at 122.65, adding to 122.00; stop well below 121.50. Add to longs on a daily close above 123.00 for 124.00/124.60 and probably a lot more before year-end.


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Mizuho Corporate Bank  | 1-3-3, Marunouchi, Chiyoda-ku, Tokyo 100-8210
http://www.mizuho-cb.co.uk | Nicole.Elliot@mhcb.co.uk

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