A corrective phase is imminent for Gilt and Bund yields, according to George Davis, Chief FIC Technical Analyst at RBC Capital Markets.
Davis says a break above -0.28 would begin a corrective phase for Bund yields taking it to -0.19 and possibly the channel top at -0.10 (see Chart 1). These levels are expected, however, to attract buying interest in Bunds and Davis thinks the downtrend for Bund yields would then resume, giving a one to three-month target of -0.35
Likewise, a similar situation is unfolding for Gilts. Davis says a daily close above 0.85 would trigger a correction to 0.91 and possibly 0.97, where he expects significant buying interest in Gilts will push it back down towards his one to three-month target at 0.80 (see Chart 2).