The Thrust In Italian 10 Year Bond Yield: Canary In The Coal Mine?
Italian 10 year YIELD has climbed from 4.13% to 4.82% (+17%) since the election, which thrust YIELD out of a 2-1/2 month base pattern that suggests to us the entire corrective process since the Nov. 2012 high at 7.47% is complete-- and that a powerful new YIELD upleg is on progress. Equally as serious, the EURO has broken its July-Feb. support line-- the line that has been in place, and that has contained every pullback, for 7 months-- since ECB Head Mario Draghi declared on 7/26/12 "to do whatever is necessary to preserve the EURO (and the Eurozone)."
Our analysis argues that the EUR/USD has ENDED a multi-month correction within a larger bear trend, which leaves it vulnerable to a decline beneath 1.2660 to revisit its July low at 1.2040.
Should such a scenario unfold, peripheral Eurozone bond YIELDS should skyrocket once again, compelling Mr. Draghi to back up his words with actions. Will the Eurozone core nations support him if there is a next time?
Michael Paulenoff, PrecisionStockPicks.com 2/26/13
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