EURO BUND & US 10 YEAR T-NOTE

It was mid-March when U.S. CPI data was higher than expected and everyone feared from a possible inflationary environment. Bonds sold-off and equities rallied with commodities. On the 17th of March I reviewed Euro Bund & 10 Year T-Note prices and concluded that it is still early to call for an inflationary environment and a major correction in govt. bonds. Both govt. bonds were testing their long-term moving averages (200-day) and were likely to rebound from these levels.

http://techcharts.wordpress.com/2012/03/17/euro-bund-us-10-year-t-note-2/

Since the last update bonds have rebounded sharply and deflation and RISK OFF environment is back again. Equities are weak and bonds are strong. Long-term uptrends are still intact BUT with one major warning; weekly RSI divergences! Though bonds are moving higher, momentum is not supportive of the last 8 months price action. Price is trying to move higher with weaker momentum. Watch govt. bonds with a positive bias and place an intermediate/long-term stop at the 200 day moving averages. For Euro Bund strong support is at 136 and for U.S. 10 Year T-Notes strong support is at 129 levels.