GML - Where to from Here? - 17th March 2010
THE BOND MARKETS
So What Have We Learned in 2,065 years?
"The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt. People must again learn to work, instead of living on public assistance." - Cicero - 55 BC
Evidently nothing ............
THE UK GILT MARKET
There can be little doubt that the UK is in a Sovereign Debt crisis
with current Sterling weakness underlying the problems ahead.
The UK is running the risk of losing its AAA rating with more expensive borrowing costs to industry and private individuals . Growth will be stifled leading to lower tax receipts
This will force government to borrow even more if they can or reduce public spending … little hope of the latter from the current Keynesian government chaotic thinking. They could resort to more QE (crazy money) which would dramatically collapse the pound leading to insufferable inflation. We are already leader of the pack in this regard.
The Gilt markets are controlled by rising and falling interest rates. It is difficult to see how the deranged antics of this government in collusion with the Bank of England can lead to anything other than forced higher interest rates accompanied by falling Gilt values.
As always we will defer to our Gann analysis to stimulate actions to avoid the consequences of Britain’s dilemma.
The Gilt All index is now on critical support. The chart shows a fall to the tops of 2008 and at the lows of the trading range. The falling angle would have to be broken before a buy would be considered but a fall under 150 would be a precursor to a sharp fall to 141. Note that this is a 4th attempt which often goes through.
THE UK INDEX LINKED MARKETS
Recent reports on inflation have shown the UK Inflation rate, despite the manipulations of the British Government, to be the highest in the western world. Our analyses of the Inflation Linked market under reveals a fall to support and now being on the verge of triggering a Buy signal.
US TREASURY BONDS
The charts illustrates the US Bond market trading sideways having not risen since May of last year. There would appear to further weakness due down to 114/112.5 where questions will be answered.
GERMAN BUND MARKET
German Bunds have been an unproductive area for the past 12 months but are still be being held up by the rising angle. A break below here would be very bearish for Bunds.
Here again there has been little progress for over a year but a break above current levels might be interesting in this non volatile environment. A break under the angle would turn this investment sector into a no go area.
A Synopsis of the WTFH’s of January to March are now being prepared which should be the forerunner to an interesting and exciting remainder of what has been a dull year to date as predicted by the January Effect.