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13 Apr 2015
Treasuries: selling pressure might persist this week – RBS
FXStreet (Barcelona) - William O'Donnell, Head of US Treasury Strategy at RBS, sees selling pressure on US treasuries to likely to continue this week, further suggesting ~2.25% levels key for buyers and 1.75% and below key for sellers.
Key Quotes
“So we're waiting with everyone else to see how the upcoming data may shape thinking at our data dependent Fed. In the meantime, we continue to advocate back-end curve steepeners and 'pro-belly' butterflies.”
“Long term charts strongly suggest that the balance of risks favor a steeper curve and a richer belly, so we cling to that thinking. I especially like the positive carry and roll in our trade recommendations as it offers a nice little cushion for what could be a bumpy ride in the coming months.”
“But if the trend signals in the curve and curvature-related charts are pretty clear, the charts of individual benchmark Treasuries look pretty muddied. Last week's modest sell-off has gone some way to relieve overbought conditions evident in all Treasury maturities and there are indications that the selling pressure could persist through this week too.”
“I hear anecdotes of foreign interest in 10's behind/above 2.00% and I'll be watching to see if it materializes.”
“That said, I think the levels in 10's to get excited about are ~2.25% as a buyer and at 1.75% or below as a seller—rather than here in the potentially noisy middle.”
Key Quotes
“So we're waiting with everyone else to see how the upcoming data may shape thinking at our data dependent Fed. In the meantime, we continue to advocate back-end curve steepeners and 'pro-belly' butterflies.”
“Long term charts strongly suggest that the balance of risks favor a steeper curve and a richer belly, so we cling to that thinking. I especially like the positive carry and roll in our trade recommendations as it offers a nice little cushion for what could be a bumpy ride in the coming months.”
“But if the trend signals in the curve and curvature-related charts are pretty clear, the charts of individual benchmark Treasuries look pretty muddied. Last week's modest sell-off has gone some way to relieve overbought conditions evident in all Treasury maturities and there are indications that the selling pressure could persist through this week too.”
“I hear anecdotes of foreign interest in 10's behind/above 2.00% and I'll be watching to see if it materializes.”
“That said, I think the levels in 10's to get excited about are ~2.25% as a buyer and at 1.75% or below as a seller—rather than here in the potentially noisy middle.”