US treasuries higher, and overbought – RBS

FXStreet (Barcelona) - William O'Donnell, Head of US Treasury Strategy at RBS, comments on the US bond market and further shares the technical outlook for 2s, 5s and 10s treasury yields.

Key Quotes

“Treasuries are higher with bull flattening today's theme after manufacturing PMI's in Europe and the UK surprised to the upside while China's mfg. surveys hover near 50.”

“Overnight activity picked up markedly in US rates with block activity in TU and FV futures a standout.”

“Our overnight US rates flows picked up markedly and we had 2-way Asian bank flows in 5's, ongoing better buying in 2's and 3's, in EU hours we had better buying in the back end and there were a host of block trades(looking like buys) in FV and TU futures. Overnight Treasury volume (4pm to 6am) was 146% of the 10-day average volume for the overnight hours.”

“2s (0.56%)- Next major support doesn't emerge until ~0.80% where we found buyers back in the spring of 2011. Resistance seen at 0.40% where we'd close a gap left behind in late October. Daily momentum is mixed.”

“5s (1.37%)- Next major support comes in at 1.80% and just above. Next resistance begins at ~1.30% and extends down to major resistance at 1.15%. Daily momentum is overbought and mixed/aimless.”

“10s (1.915%)-Next resistance comes in some congestion in and around 1.80% then the low yields of 1.64%. Next support comes in ~2.40% with major support at 2.66% after that. Daily momentum is overbought and still mixed.“