HALISTER1: Gilt-Bund 10Y Yield Spread May Widen 16BPs on Technical Pattern

Gilt-Bund 10Y Yield Spread May Widen 16BPs on Technical Pattern

(Bloomberg) -- Relative underperformance of gilts vs. bunds may extend after yield spread forms a bottoming pattern, Bloomberg technical analyst Sejul Gokal writes.
  • Spread, now at 96bps, could potentially widen toward 112bps; see chart here
  • Measured objective captures the spread lows seen in Aug. 2015; Feb. 2016 lows were also around 112bps
  • If spread overshoots, it could approach 124bps, top of narrowing trend channel from March 2015
  • Risk to outlook may stem from relative gilt outperformance beyond 80bps, which is right shoulder trough of pattern
  • Earlier: U.K. 10-Year Yield Head-and-Shoulders Projects Pre- Brexit High
  • 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.
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