Bond Technical Strategy – Weekly by Lloyds TSB

A sea-change in sentiment towards the equity and bond markets spells the end of the medium term upward trend for bonds.

A sea-change in sentiment towards the equity and bond markets spells the end of the medium term upward trend for bonds. In what has be an historic week in many ways, the final blow out which usually indicates a reversal was seen in bonds with the volatilty strongly arguing for a counter trend retracement. Because volatility at such elevated levels, the market is very much an intra-day and short term focussed environment and until this subsides, normal order will
not be restored. However, the consistent bullish view of the bond markets here over the past months is now over.

Added to the recovery in equities, commodities should stage a come back over the coming weeks, thus adding further pressure to the long end of the market.

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