17.04.201414:58:00UTC+00Us 5s30s Resumes Its Flattening Trend

Quotes from BofA Merrill Lynch Global Research:

- US 5s30s continue to flatten aggressively. Indeed, the spread is now at its flattest levels since May'09. While in the near term there is potential that this flattening is stretched as we are at risk of 6 consecutive flatter daily closes (a close below 179.7bps makes this potential a reality), steepening remains counter trend and corrective.

- On medium term basis we reiterate our downside targets at 143bps, while closer to home we target 170.3bps (6m channel support and swing target). Turning to the equity market, yesterday's close in the CASH S&P500 above its 50d (1851.12) reaffirms the near term turn in trend.

- While this turn is tactical and should be seen as short lived, the S&P500 has the potential to make new highs for the 1923/1942 area, particularly on a break of the Apr-10 highs at 1867.50/1872.53 (ESM and Cash)