Bond Technical Strategy – Weekly by Lloyds TSB

The outlook for short term yields continues to imply further downside risk. Over the past few weeks, the technical signals have remained relatively clear in this space compared to the volatility (implying indecision) seen further down the curve.

The outlook for short term yields continues to imply further downside risk. Over the past few weeks, the technical signals have remained relatively clear in this space compared to the volatility (implying indecision) seen further down the curve. This continues to suggest that the on going risks are for a reversal of trend in the long end, although the actual signals are currently absent.

Commodities continue to exhibit tentative signs of bargain hunting with palladium potentially leading precious metals towards what could be a positive month. Coupled with the possible (yet unconfirmed as yet) reversal set-ups for equities, this could actually see pressure on core bonds, although in the absense of specific reversal signals, the strategy is to continue to the current bullish positions until the price action clearly signals otherwise.

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