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10yr breaks support, Goldman issues identical chart analysis as ShadowCap

naufalsanaullah's picture




 

Original piece here.

The 10yr broke the important 310bps support level I've been highlighting for a couple weeks now. The risk aversion expressed by the demand for Tsy notes manifested in a more pervasive risk asset decline yesterday, in equity, credit, and FX.

TNX

Meanwhile, GS FX sales strat issued a report recently highlighting two very important technical developments we've been repeatedly speaking about: the 1040 H&S in the S&P and the 10yr 310bps level. The report is below.

GS Tech Take 6.25

On the economic data front, the Chinese LEI was revised downward to 0.3% from 1.7%, causing Chinese equities to fall. The Aussie Dollar also plunged on the news, as did copper. The Australia-China-USA "love triangle" pervasively covered on ShadowCap is quickly becoming a closely-followed theme in financial news.

 

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Wed, 06/30/2010 - 12:10 | 444299 traderjoe
traderjoe's picture

I think we'll get one last gasp up in Treasury yields on a QEII - perhaps to 2.5% on the 10-year. And then it will dawn on buyers that the US will politely default (see the posting the other day) or we have a nice hyper-inflationary collapse of the currency. Either way, not many buyers today are going to get paid back as they expect. 

Wed, 06/30/2010 - 12:31 | 444350 A Man without Q...
A Man without Qualities's picture

They'll probably get paid in US Treasury Dollars, which will be equivalent to $1,000 old Federal Reserve Dollars.  Once QE2 stuffs every piece of toxic crap in the universe inside the Fed, it will be put out of its misery...

Wed, 06/30/2010 - 12:29 | 444345 Sudden Debt
Sudden Debt's picture

The fact that GS issues the same chart analysis means the guys at shadowcap made a mistake.

Wed, 06/30/2010 - 12:30 | 444348 TheGoat
TheGoat's picture

The Australia-China-USA "love triangle", for the last few months its been the Australia China - love in.

Most Aussies have no idea whats coming they are too busy buying houses that never go down, coz its different here cobber.

Yeah we got lots of sheep down here..

Wed, 06/30/2010 - 14:38 | 444630 Running on Empty
Running on Empty's picture

That's alright there's lots of Cobbers to go around as

the Canadian market has seen double digit increases

in the housing costs based on nothing more than greed

and speculation. Oh gee look April's growth came in flat

in Canada.Oh look home sales in Toronto in May were down 20%

from the previous month with a 21% increase in listings.

It's a bitch when everyone try's to leave a burning building at

the same time.

Wed, 06/30/2010 - 23:01 | 445713 dkny
dkny's picture

Out of curiosity, where do you get the numbers?

Thanks.

Wed, 06/30/2010 - 21:29 | 445582 ozziindaus
ozziindaus's picture

Ohh come on, where's your Aussie spirit? Only pricks burst bubbles.

But i have to agree and so does SteveNYC. Too bad those brickies, taxidrivers and sparkies with their 3 investment properties don't see beyond their next job. 

Wed, 06/30/2010 - 21:44 | 445607 Budd Fox
Budd Fox's picture

How true mate...how sadly true.

 

Wed, 06/30/2010 - 13:17 | 444443 RockyRacoon
RockyRacoon's picture

Talk about moving your goal posts... these are on wheels.

Wed, 06/30/2010 - 13:18 | 444448 russki standart
russki standart's picture

The USD 10 yr is entering bubble territory based on fear trades and market manipulation. The short of the century will occur if the yield drops below 2.5% Disclosure, I am flat on the 10yr.

Wed, 06/30/2010 - 13:20 | 444451 Invisible Hand
Invisible Hand's picture

I think the flight to safety may, in the end, closely resemble the rush to the showers to get cleaned at Auschwitz.

I don't have any alternatives to this trade but I think that there are no "risk free" investments and we are just waiting to see which countries blow up first.

The US is a few years away from being at risk of all tax revenues being required to service the debt (can't remember the article saying that on ZH, but it was in last few days).

I have been doing the math for a couple of years but basically by 2018 or so, we will probably hit 20 Trillion in (on the books) debt.  If the average coupon rises to 10% (could happen, it has in Greece) that requires 2 Trillion/year in debt service.  That's basically everything the US govt takes in.  Game Over.

Can we prevent this? Sure.  Will we?  No sign of any changes yet.  The question is can QE erode the value of debt faster than market raises interest rates.

Wed, 06/30/2010 - 13:47 | 444519 Lux Fiat
Lux Fiat's picture

Some good stuff.  Thanks for sharing.

The first page of the report states "...is not the product of the Global Investment Research Department or Fixed Income Research.  It is not a research report and is not intended as such."  The takeaway here on my end is to pay attention to GS's "non-research" documents, and ignore the formal research reports.

Wed, 06/30/2010 - 15:58 | 444859 4shzl
4shzl's picture

I'll take EOQ window-dressing for $1 billion, Alex.

Got coupons?  Got duration?  If not, you got some 'splainin' to do . . .

Paging Mr. Taleb, paging Mr. Nassim Taleb: your ass-whuppin' is waiting.  LOL.

Wed, 06/30/2010 - 19:42 | 445431 Rainmaker
Rainmaker's picture

Boy, look at SP500 Nas100 and R2000 charts.  Just haning there, baby.  Hanging there like overripe fruit, below their resistance.

Dow 9700 area has alwasy been a big resistance up or down, going back a decade.  The PPT must defend.  If it goes, so too we all will go.

Except shorts, who will be loving it.  Just watch out for counterparty risk.

Wed, 06/30/2010 - 21:34 | 445590 newstreet
newstreet's picture

Please step forward, all those who rode eur/chf all the way down.

Is there anyone?

Wed, 06/30/2010 - 22:49 | 445692 Grand Supercycle
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