Bloomberg News

Italian, Spanish Bond Yields to Keep Rising: Technical Analysis

April 16, 2012

Italian bonds will decline, driving yields toward 6 percent for the first time since January, Commerzbank AG said, citing trading patterns.

Italy’s 10-year bonds may lure buyers as yields approach 5.75 percent, before rates move higher, Karen Jones, head of currency, fixed-income and commodity technical analysis in London, wrote in a report today. The yield jumped five basis points to 5.58 percent at 11:26 a.m. London time. It last reached 6 percent on Jan. 31.

“The recent rebound off the 200-week moving average at 4.67 looks directional, and we would expect a deeper recovery towards 6.00-6.08” percent, Jones wrote.

Spanish bonds will also slide, according to Jones. Yields (GSPG10YR) on 10-year securities will advance to 6.36 percent after they broke a so-called resistance level at 6.03 percent, the 61.8 percent Fibonacci retracement from their November high to their March low, Commerzbank said. The yield climbed 11 basis points to 6.08 percent.

“Allow for some consolidation ahead of gains” to 6.36 percent, Jones wrote.

Fibonacci analysis is based on the theory that securities tend to rise or fall by specific percentages after reaching a high or low.

In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a bond, commodity, currency or index. Resistance is a level restricting further increases, while support levels are floors limiting declines.

To contact the reporter on this story: Anchalee Worrachate in London at

To contact the editor responsible for this story: Daniel Tilles at

The Good Business Issue
blog comments powered by Disqus