HALISTER1: Gilts 2s10s Narrowing Phase May Abate Near 34-29BPs Area: Charts

Gilts 2s10s Narrowing Phase May Abate Near 34-29BPs Area: Charts

(Bloomberg) -- Spread between 2s10s U.K. bonds, which has narrowed since June last year, may see widening pressure re-emerge closer to the 34/29bps region where the trendline from 1998 and Fibonacci cluster are located, Bloomberg technical analyst Sejul Gokal writes.
  • See chart
  • 2s10s spread now at 41bps, narrowest since 2008
  • 34/29bp support encompasses widening trendline from 1998 and 61.8% and 76.4% Fibonacci support from 1998-2010 and 2007-2010 widening cycles
  • Gilt 2s30s test the 50% retracement line of 2007-2010 widening cycle and 2003 widening peak at about 120bps (see chart)
  • Gilt curve extends yesterday’s flattening after BOE’s statement refrains from addressing scarcity issues
  • Yields on 10- and 30-year securities fell to record lows after the BOE said the bonds it couldn’t buy Tuesday would be acquired some time during the second half of the six- month QE program
  • 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)

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