Thursday, August 02, 2012

10 Y GOI Bond Yield - Elliott Wave Analysis

Above is a chart of 10 Y Bond Yield covering period from Sept 2008, we can see a clear 5 wave pattern somewhat similar to what happened to equities in the same period. Looking at the last wave {IV}, we can see that a clear 3 wave move is unfolding. Looking the last leg i.e. wave C of {IV} a little closely, we can see a possible 5 wave move might be complete. The implication of this being, we may start moving up from these levels. There might be a chance of one more dip towards the 8.0 level, if wave [4] is not complete and is actually forming a complex correction. But all in all we may see yields rising in the near to medium future. Now the reason for rising yields may be the rising inflation, or perceived risk by the creditors (e.g. banks) in lending. I don't consider myself an expert in economics at all, by by using common sense we can reach the above conclusion. I think that the main reason for rising yields may be the fear of rising inflation in coming days with Dollar rising against the INR our import costs are rising (e.g. crude) which may be fueling the inflation in our country.


  1. hello sir,
    yes the 10y GOI looks set for a rally towards 9% mark yet again. This is clearly a indication of a spike in inflation levels (as you have mentioned). The factors supporting inflation are weak monsoon, weak rupee, spike in commodity prices due to highly expected monetary stimulus by western central banks. Also the recent cut in SLR by RBI will help a spike in GOI yields.

    1. Nicely put, just imagine if you had to plan your trades after learning the facts about all the "reasons for inflation", its very scary for me. Using EWP puts you ahead of almost all fundamental traders, without knowing anything about them!
      Thanks for your comment.


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