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Elliott Wave Financial Price Forecasting

Italian ITY10yr Yield

by WaveTrack International| June 5, 2020 | No Comments

The Italian ITY10yr yield has just broken below key support levels traded last week at 1.417% as the ECB commit to more funding – existing downside targets towards 0.993% remain on-track

ECB and Yields

The European Central Bank met earlier this afternoon, deciding on an extension of the Pandemic Purchase Programme (PPP) to at least June 2021. The ECB will buy bonds up to €20bn month plus €120bn this year in a total programme rising from €600bn to €1.35 trillion Euros. The central bank leaves the main refinancing rate unchanged at 0.00% per cent.

Italy 10yt Yield - Daily - Elliott Wave Forecast by WaveTrack International

fig #1 – Italy 10yt Yield – Daily – Elliott Wave Forecast by WaveTrack International

The news of more funding into the financial system was a commitment that sends the ITY10yr yield tumbling lower from 1.592% just before the announcement to 1.373% before closing the session at 1.408%. The break below last week’s support at 1.417% is confirming original downside targets towards 0.993% remain on-track – see fig #1.

Italy 10yr Yield - Daily - Elliott Wave Forecast by WaveTrack International

fig #2 – Italy 10yr Yield – Daily – Elliott Wave Forecast by WaveTrack International

Once completed at 0.993, this decline ends a zig zag pattern for intermediate wave (2) from 2.977 opening the way for a continuation of the larger five wave impulse uptrend as wave (3) towards 3.550+/- and ultimately wave (5) to 3.790+/- sometime next year – see fig #2 & fig #3.

Italy 10yr Yield - Weekly - Elliott Wave Forecast by WaveTrack International

fig #3 – Italy 10yr Yield – Weekly – Elliott Wave Forecast by WaveTrack International

The long-term picture remains unchanged. Cycle wave A’s five wave impulse uptrend is forecast towards 8.820+/- during the next several years – see fig #4.

Italy 10yr Yield - Quarterly - Elliott Wave Forecast by WaveTrack International

fig #4 – Italy 10yr Yield – Quarterly – Elliott Wave Forecast by WaveTrack International

Italian and German 10yr Yield

The ITY10yr-DE10yr yield spread is clearly narrowing over the medium term over the next several years. However, the intermediate-term picture suggests some narrowing in the short-term. With shorter-term targets towards 1.500+/- as minor wave b. within an a-b-c widening counter-trend upswing of wave (2) that began from the Feb.’20 low of 1.263 (weekly closing chart) – see fig #5. Minor wave c. upside targets over the coming year are towards 3.018+/-.

Italy 10yr-DE 10yr Yield - Weekly - Elliott Wave Forecast by WaveTrack International

fig #5 – Italy 10yr-DE 10yr Yield – Weekly – Elliott Wave Forecast by WaveTrack International

Conclusion

The ECB is obviously ready to go to any lengths to support the Eurozone economy. For the time being, that is triggering lower Italian yields. However, slightly higher DE10yr bund yields as the burden of payment lies with Germany.

Category: Elliott Wave, Interest Rates, US10yrYields

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WaveTrack International is a financial price forecasting company dedicated to the Elliott Wave principle and work of the R.N. Elliott. Clients include Investment Banks, Pension Funds, Total/Absolute-Return/Hedge Funds, Sovereign Wealth Funds, Corporate and Market-Making/Trading institutions and informed individuals -- & just about anyone who is affected by directional price change.

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