Gilt-Bund 10Y Spread Rejects Resistance, Resumes Narrowing Trend
Alert: HALISTER1
Source: BFW (Bloomberg First Word)
To de-activate this alert, click here
To modify this alert, click here
UUID: 7947283
(Bloomberg) -- U.K.-Germany 10-year yield spread is ripe to reinstate compression trend from Dec. 2016 after the late May corrective widening fails at the stiff 77-79bps resistance, Bloomberg technical analyst Sejul Gokal writes.
- See chart here; spread now at 73bps
- Widening this week has faltered at the confluence hurdle area at 77-79bps, which is the 55-DMA, cloud base and May peaks
- Momentum valuations have reset to neutral, allowing for an impulsive spread-narrowing phase coming days; MACD has worked off stretched conditions and drifted to near the zero line
- Narrowing objective set at 66bps (YTD low) and 60bps (2016 low)
- A potential conservative majority could raise uncertainty and concerns over a hard Brexit deal, supporting gilts and weighing on gilt-bund yield spread, especially if ECB signals to the market its intention to taper its QE
- Risk factors:
- Spread: Close above 78bps
- Political: U.K. election upset could spur bond sell-off amid potential pick-up in gilt issuance
- NOTE: Sejul Gokal is a technical strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice.
Alert: HALISTER1
Source: BFW (Bloomberg First Word)
To de-activate this alert, click here
To modify this alert, click here
UUID: 7947283