Our resident chart expert, Jordan Kotick, Global Head of Technical Analysis at Barclays Capital is stuck at home in Princeton, New Jersey with over a foot of snow.
But that doesn’t stop him from studying the charts.
Here’s these week’s Q&A.
Q - Right now, there’s a lot of discussions about the debt crises in Europe.
Are the charts telling you anything about how the market is responding to the current environment across the pond?
A - We would best encapsulate the sentiment as 'skeptical". While spreads have calmed down recently… relatively speaking, rates in general are still holding their underlying bid. Translation: that means lower yields. Given the sensitivity of the front end of the yield curve, we note that European 2 year yields are still hovering near the bottom of the range that has contained trade for over 12 months. Below this level (0.95%-1.00%) would be a stark break, suggest higher prices, lower yields, and a continued flight to safety and lack of confidence overall.