Home > Uncategorized > Weekly Overview 2009/12/14: Significant Change in Govvies Trend More Important Now Than on Initial Drop (rate rise) Over The Past Two Weeks

Weekly Overview 2009/12/14: Significant Change in Govvies Trend More Important Now Than on Initial Drop (rate rise) Over The Past Two Weeks

▪  It is critical that this is more pronounced in the US and UK on the failure of supports that is not occurring as heavily in Europe as yet. Below key supports at December T-note 120-00/119-16 (March contract at 118-24/-08), the markets have tested more important supports at 119-00 in the December contract and in the 117-16 area in the March.  Even more radical was the failure of December Gilt 119.00-118.70 (March contract equivalent of 117.40-.10), and have also now tested important supports at 117.00 in the December contract and the major 115.35 lead contract low (from back in July) in the March contract. Below those levels each of them can drop another couple of points. 

▪  The reason all of this is more critical is the effect higher long term US bond rates have on the US mortgage interest rate. While the equities have proven resilient so far, how much higher can rates go into still tight credit markets prior to the impact on critical US housing and related consumer sentiment (and banks and commercial real estate) causes equities to take note?

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