Bunds Likely to Dip to 127.12 |
LONDON, Nov 18 (Reuters) - Following is a selection of comments from analysts on important technical developments in the bond and interest rate markets.
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LEVELS (continuous contract basis) Bund 128.07 (-0.38) Euribor 98.930 (+0.005) Gilt 121.33 (-0.36) Short stg 99.230 (-0.010) T-bond 126-26/32 (-08/32) Eurodollar 99.685 (+0.003)
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FABIEN MANAC'H, SOCIETE GENERALE
BUNDS: "After a short-lived intra-day recovery yesterday, the Bund headed south again. So the short-term bias remains to the downside. The Bund is likely to break below Tuesday's low of 127.98 and dip to the 127.12/37 support area — June and July lows. It should then attempt to reverse upwards."
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RICHARD ADCOCK, UBS
BUNDS: "Tuesday's low and rally point in Bunds at 127.98 is the first support focus today and the risk is that a break below here will be seen to trigger further downside. Trades under 127.98 will see an acceleration in the decline down to the 38 percent retracement of the year-to-date range at 127.26."
SCHATZ: "For today, Schatz are bearish while they trade below the 109.06/095 retracement and high trade, and as long as this remains the case the expectation is for limited bounces and further price weakness. A break below Tuesday's 108.805 low will be the next negative, exposing the market to further liquidation to the October 27th extreme at 108.69 and then 108.575."
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NOMURA
U.S. 10-YEAR T-NOTE/BUND SPREAD: "Previous updates highlighted the potential for a corrective widening move towards 40-45bp to correct the previous April to October tightening from 90bp to 0bp. Monday's and Tuesday's spike higher towards 35-40bp achieved the bulk of or all of the initial move wider…Since the overall widening correction is expected to be a multi-month event, the widening to 40bp likely represents the first phase of that widening and may now be followed by a trading range broadly between 10bp and 25bp. Be prepared for a possible choppy trading range."
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