Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
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Technical Update - US 10-year Treasury yields indicated downtrend but the future is not agreeing. Higher yields in the cards
Kim Cramer Larsson
Technical Analyst, Saxo Bank
Summary: US 10-year Treasury Yields indicated reversal of uptrend last week after closing below 4.50, but the future didn’t agree and has now resumed downtrend. Yields could move to 4.80
US 10-year Treasury yields did close below 4.50 last week and below the lower rising trendline indicating a possible downtrend. However, the RSI didn’t close below 40 threshold i.e., not confirming a downtrend.
Wit the bounce back above the rising trendline and above the 55 DMA yields could be resuming uptrend.
Currently testing the 0.382 retracement a close above could lead to further upside to the 0.618 retracement at around 4.80.
The RSI is testing its falling trendline and a close above will indicate yields are likely to rise to 4.80 level.
A close above 4.80 would be an indication of previous peak at 4.01 is likely to be tested.
A close below last week’s low at 4.47 will establish a downtrend. A close below 4.47 will also most likely push the RSI below 40 thus confirming the bearish scenario US 10-year Treasury future is from a technical point of view the most interesting and the instrument that is expressing the real interest the best, simply because it expresses actual trading. The Yield chart is merely “just” a calculation or derivative of the underlying instrument i.e., the future.
The future was rejected at the upper falling trendline and resistance at around 108 27/32, and the Cloud (shaded area)
Three times the future has failed to close above 108 16/32 and with the bearish candle 9th November the sellers have taken back control.
Key support at the 0.618 retracement at around 106 20/32
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