The latest stock market correction was reflected in the simultaneous purchase of government bonds. This circumstance was stronger in Europe than in the United States, pointing out that the macroeconomic reasons for a rate hike in Europe are not imminent as they are for the United States.
According to the ARC model (absolute, relative and comparative) this trend contributes to provide operational trigger levels useful for qualifying the buy signal that can be formed on the main equity indices. In this specific case, we will analyze the interest rates trends of the BUND and the T-NOTE to support possible buy signals concerning DAX30 and the S & P500 index. Read More The Inch Magazine
German Government Interest Rates 10Y daily close April 13th, 2018: 0.5100
As can be seen from the chart, the rates have been supported by 200-day moving average. The traders and investors are now waiting to resolve the indecision still present on the stock markets between continuation of the corrective phase and recovery of the bullish trend.
The bullish breakout of 0.5380 (higher daily close) will correspond to the recovery of the bullish trend of the DAX30, while the possible downward violation of 0.4730 (lower daily close) will continue the interest for government bonds to the detriment of the equities. Read more: German Government Interest Rates 10Y April 13th, 2018
German Government Interest Rates 10Y monthly chart April 13th, 2018: 0.5100
As for the long term, we are still looking for the end of the bearish cycle that started in the 80s. At the first monthly close above 0.8080, the strategic investments on the market of the European government bonds will gradually change. To accentuate significantly only over 1.1270. For the month of April, Bund purchases can continue up to 0.4240 / 0.4070, hardly any further.
Euribor April 13th, 2018
To understand when a progressive reversal of the bearish interest rate cycle in Europe can be recorded, it is useful to follow the Euribor market. Exactly one year ago, the three-month rate drop came to a halt and then highlighted this side phase still ongoing.
At the first weekly closing above – 0.3250, a first inversion signal will be recorded. On the other hand, a possible close below – 3320, unlikely but possible, will postpone once again the end of the ECB’s expansive monetary policy.
U.S.A. TNOTE Interest Rates 10Y daily close April 13th, 2018: 2.8250
The correction of the S & P500 was not reflected in a tangible decline in rates. Interest in TNOTE is not as pronounced as for the BUND. At the first daily, close above 2.8430, 10-year sales will start again in favor of a possible upturn in the bullish trend of the S&P500 index.
On the other hand, any daily close below 2.7170, unlikely but possible, will be negatively interpreted by the prospects of the American equity indices. In this last case, the correction of the S&P500 can continue up to detection levels for the TNOTE between 2.5500 and 2.5000. Read more: U.S.A. TNOTE Interest Rates 10Y April, 13th, 2018
U.S.A. TNOTE Interest Rates 10Y Monthly chart April 13th, 2018: 2.8250
For the U.S.A. interest rate markets, the bullish trend has already been established. The last bullish swing has stopped near the important resistance area present between 2.9500 and 3.0500 and until this last level will not be exceeded, it will not be possible to count on much greater recoveries.
Above 3.0500, we expect rates to reach first 4,000 and 4,650 later. During the next few months, we expect possible downturns in the 2.5500 / 2.5000 area, hardly any further.