German 2 and 10 Year Yields, Targets, Ranges, Levels
The 10 year German Bond yield currently trades at 0.785, off from Friday’s 0.925 close. The larger range is found between 0.64 – 1.13 and intraday between the 1 year average at 0.64 and 30 day average at 0.80. The ranges are extremely tight. A break higher at 0.80 targets then 1.13. Yet the distribution is correctly dispersed. Longest – shortest term averages are found at 2.67, 1.68, 1.13, 0.80 and 0.64. The 30 day can be argued is misaligned and should be located below 0.64 but its not only holding the current distribution fairly even but it serves as a containment as the Greek crisis unfolds. What dictates current prices however are points at 0.64 and 2.67. From 2.67, prices are oversold and become overbought with prices rise from 0.64. Current price is far more oversold from 2.67 than overbought at 0.64. Targets from long to shortest terms range from 1.48, 0.95, 0.90 and 0.56. To offer context to current 0.785, June’s monthly average was 0.92. Last time we saw 0.78 close as a monthly average was October 2015. In terms of the larger Yield distribution, yields are negative from 1- 4 years and positive from 5 – 30.
German 2 Year Yield
The current 2 year yield trades at negative 0.21, down from Friday’s negative 0.18 close. The distribution is found from longest to shortest terms from 1.55, 0.32, negative 0.0005 and minus 0.136. Current price trades below the 30 day average at minus 0.18 and 1 year at minus 0.13. The range is not only tight but viewed from the 1 year average, current price is perfectly balanced. Longer term from 1.55 and 0.32, price doesn’t reveal threats of wide deviations instead price is fairly balanced. What’s important is the point at negative 0.21 due to its location below the Deposit Rate, Eonia. Targets from longest to shortest terms range from minus 0.0042, minus 0.216, minus 0.160 and minus 0.232. If Greece is driving current prices, 30 day Correlations between EUR/USD and 2 year Greece yields are found at 0.46, Greece Vs Bunds at 0.51. Even German Vs DKK correlates to 0.34, an even price balance all around which reveals Greece is not the main driver of current prices. The larger perspective is yields closed below the deposit rate in monthly average terms March, April and May and are on the verge to close below for June.
Brian Twomey Inside the Currency Market, btwomey.com