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BUND

Bund: Rising wedge spottedBund's forming a rising wedge advance, which looks like a terminal pattern ending in a lower high. A similar pattern is in the TLT chart, and probably also forming in the S&P500 in the coming days. Time at mode trend signals have failed and led to a retest of the mode, and a new uptrend signal, and then a second one confirming this week after the close. I like how Rgmov isn't confirming this advance, so I'd be waiting to short the top, which promises a very sharp resolution to the downside, possibly retesting the 148 to 138 zone, making yields attractive again once there. This setup will take patience, but keep a close watch of it, the timing might be way faster than what the trend signals suggest, and might merely be a matter of reaching the target prices. Entering the zone between 159.34 and 157.88 would give me enough incentive for a short already. Good luck, Ivan.
FX:BUNDShort
by IvanLabrie
Relationship between Bund and Euro US DollarWhat is the Bund? The Bund is the German 10-Year Treasury bill, also known as a government bond. A holder of a bond is a creditor, and the issuer of a bond is called a borrower or debtor. When the price of the Bund increases, the yield received on that bond decreases and vice versa. What is the relationship between Bund and EURUSD? Why is this relationship there? The relationship between the Bund and EURUSD is inversely correlated - when the yield of the Bund increases, the Euro is bullish, and when it decreases it is bearish. One thing to note is that the price of a bond and the yield received is also inversely correlated. The relationship is there because during periods of uncertainty, people generally look for less risky positions (they may liquidate any equity positions they may hold and invest in bonds if they have low confidence in the stock market). This new demand for bonds pushes the price higher, but forces the yields down. A quick equation can show why this occurs: Let's say we have a bond priced at £1,000 with a 10% coupon rate (the amount you can expect to return per annum). The equation would be (£100/£1000) where yield = coupon value/price of bond. If the price of the bond increases to £2000, the yield decreases (£100/£2000) = 5% PA. For a bond holder looking to sell the bond at a later date, this is good as they have already locked in the rate of interest that they will be paying. However, as a buyer of a bond, you want to be buying low to lock in a higher yield. A concise explanation about what influences bond prices can be found at Investopedia (www.investopedia.com). I have borrowed from that below. The factor that influences a bond more than any other is the level of prevailing interest rates in the economy. When interest rates rise, the prices of bonds in the market fall, thereby raising the yield of the older bonds and bringing them into line with newer bonds being issued with higher coupons. When interest rates fall, the prices of bonds in the market rise, thereby lowering the yield of the older bonds and bringing them into line with newer bonds being issued with lower coupons. Bond yields and FX The spreads of the 10Y bonds can be used to gauge the direction for currencies as well. When the yield spread increases in favour of a certain currency, it is likely that you will see that currency appreciate vs others. When a yield spread tops or bottoms out, you can expect the related currency to begin to fall/rise in the following months. Playing on interest rate differentials is known as carry trading. Above graph explained The Bund is testing back to its 200 day EMA. On the recent occasions when it has tested here, it has failed to break above, however, the upward momentum appears to be intact . In the short term there is clear divergence between Bund & EURUSD. Furthermore our model shows the Bund as being a weakest bear suggesting it would like to go & turn bullish and indeed it would be back in a bull trend through 154 vs close last night of 152.9. Form your own opinions. Losses may exceed deposits.
FX:BUNDEducation
by DavidBelleFX
8
Watch for the Bund to bottom around 148.50The sharp rise in sovereign yields in Europe has taken a lot of people by surprise, and the sentiment in the market is more and more bearish as people are starting to believe Bill Gross's "short of a century" statement made two months ago. We should all be asking ourselves if it's reasonable to expect yields to keep rising over the long term as the ECB will clearly continue buying up excess supply for the next 15 months. If you think this is the case, then you must believe that the euro will head back above $1.20 during the second half of the year (this isn't necessarily out of the question given the risk with Fed rate forecasts). Whatever you may think on a fundamental basis, you should be watching the Bund's long-term bullish trend line closely in the days ahead. This support comes in at around 148.50, which is the 50% retracement level from the 2013 lows to this year's highs. Any daily candlestick indicating a bullish reversal after having tested this support would make me want to attempt a long strategy. I'd like to see the EUR/USD hit $1.145-1.15 with the Bund at support to have the best timing possible on such a strategy.
GLong
by ABRAK75
6
EURUSD Trades Into Supply Zone, Following Bund & DXY CollapseThis is not the first time the euro-dollar has been able to stage monster rallies, as faith in the US dollar continues to crumble. The dollar index has had a few of the worst days since 2009. Previously via Twitter, I supported the initial rally from 1.0880; but as it approached the current supply zone, I believed it would be a tough nut to crack for further gains. After rejection of the supply resistance at 1.14629 and began to falter, I warned that the pair could fall to 1.1033. It actually fell through that to 1.08208. The pair recovered quickly on a few factors: The US economic data has been absolutely horrendous. Both retail sales and consumer prices are rolling over on a quarterly basis and mirroring the decline of the "Great Recession." Inventories are at an all-time high, with the sales-to-inventory ratio spiking to recession levels. It's always taking a recession to restore the balance. Jobless claims have only been tracking the labor participation rate lower because one cannot receive unemployment benefits unless one is actively looking for a job. New orders and manufacturing have been doping at an alarming rate, and layoffs in the energy sector are staggering. Even more concerning is the financial sector is threatening to cut thousands of jobs, including JP Morgan and HSBC. US Bancrop's CEO said that if the Federal Reserve does not raise rates soon jobs will be terminated. And the Fed is highly unlikely to raise rates, which is bearish for the dollar and bullish long-term for the euro. Futhermore, the general consensus with traders is that Greece will get a deal done. I am not sure how likely that is, which could cause a problem for the euro near-term. The absolute collapse of the bund is driving the euro higher without doubt. Just as of April, the German bund reached a low of only 5 bps, or .05 percent. Today, it has ballooned to 91 bps, or .91 percent. While still under one percent, that in itself is nothing to worry about. However, like with the DXY rise, it is the rate of speed that is alarming. During yesterday's ECB press conference, President Mario Draghi said to expect more market volatility yet not to expect the central bank to contain it. The trend on EURUSD is up as it is making a series of higher lows and, potentially, higher highs. The supply zone resistance will be the key price point to watch. Moreover, if price action lingers within the supply zone without a bullish catalyst, expect the pair to retrace. Look for daily support at 1.1255 and 1.1033. Traders make look to consolidate on profit taking since the pair is up several hundred pips in seven trading days. If price action can close (also wait for confirmation) above the supply zone, upside targets can be found at 1.1655 (currently budding against the 200-day EMA) and 1.1862. A few supporting tweets: twitter.com twitter.com twitter.com (original attempt in supply zone) Feel free to contact me or check out my work: Twitter: lemieux_26 Bullion.Directory: bullion.directory
by CommoditiesTrader
8
The fall in Bund yield do not mean the same than beforeAs you could remember during the last Greek crisis the Bund Yield fell even to negative territory, this was due the haven factor in the biggest economy in EZ Now that every body says that the situation is much better than in the 2012 the Yield (as you can see in brown, remember that the price of Bund is inverse to it's yield) is even lower. Why? The mail reason is the demand that is expected from March due the QE announced by the ECB. This expectancy of scarcity of bunds is pushing the price of the bund upper (or the yield lower) so now by this ECB QE we can not use the Bund as a measure of fear so plain as we did in the past. The main evidence of it is the behavior of the DAX, the Equity is still rising (not as happened in the last peek of Bund price) Any Way the rise in Bund still very good correlation with the EUR.
B
by 7pasos