Bond Technical Strategy – Weekly by Lloyds TSB

As bond yields continue to tumble the question has to be asked; is the bearish financial market sentiment approaching saturation? In the last release I was cautious, but positive for bonds and the trends have continued on an upward path.

As bond yields continue to tumble the question has to be asked; is the bearish financial market sentiment approaching saturation? In the last release I was cautious, but positive for bonds and the trends have continued on an upward path. Whilst there are no technical signals
at present to indicate a reversal of trend, some counter-trend factors have been raised a notch in the last couple of weeks. Firstly, we have seen equities rebound from the recent significant lows. The cushion from the low is not enough to be confident the gains will stick,
but another week of similar appreciation could see a magnified reversal in bonds.

Secondly, specific buy signals are emerging in soft commodities and precious metals. Once again these are tentative moves but a step towards a potentially more substantial reversal. The default position is still bullish, but the exits will be monitored more closely this week.

Full Report