Forex Flash: 10-year US treasuries confined to 1.70-2.10 range – RBS

According to William O'Donnell, an Analyst at RBS, “We continue to see a near term 1.70% to 2.10% range in the 10-year US Treasuries. A key support remains the 2.06-2.10% in 10yrs, and first resistance is 1.90%-1.93%. Watching the ascending bear channel lines (1.93% in 10s and 3.10% in bonds) is important – breaks through could extend the rally while a close above 2.10% in 10s opens up 2.30%.”

Treasuries have scratched out modest overnight gains despite strong German (Feb ZEW survey highest in 3 years) data. Chinese shares led Asian stock prices mostly lower, European stock markets are a tad higher (after the strong ZEW and a successful Spanish T-Bill auction) and S&P futures are showing +2pts here at 7am.

Moreover, the overnight Treasury flows were pretty light with a central bank selling 10's near the mid-afternoon lows in Tokyo hours. China returned from holiday however the overall activity remains below average –overnight Treasury broker volume was 77% of the 10-day average.