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 2-, 10- and 30-year Treasury yields and German 10-year Bund yields pointing lower
Kim Cramer Larsson
Technical Analyst, Saxo Bank
Summary: US Treasury yields have taken out key support levels and have now confirmed bearish trends.
German Bund yields still in uptrend but breaking rising trendline
US 2-year Treasury yields have closed below key support at around 4.75. A move down to support at around 4.57 and the 200 Daily Moving Average seems likely.
RSI below 40 threshold is confirming the bearish trend
To reverse the bearish trend a close above 4.92 is needed
US 10-year Treasury yields have closed below 4.36 key support level and RSI closed below 40 threshold thereby confirming downtrend.
Yields are also below the 100 DMA for the first time since May.
There is now downside risk to support at around 4.07 but 4% could be tested. The 200 DMA will add to the support.
For 10-year yields to reverse to uptrend a close above 4.52 is needed.
US 30-year Treasury yields have been in a downtrend since breaking below 4.60 and further confirmed since RSI closed below 40.
Currently testing support at around 4.47. A close below can lead to further downside possibly down to strong support at 4.18 with minor support at 4.30
For US 30-year yields to reverse the trend a close above 4.83
A close above 4.62 will pause or demolish the bearish scenario
German 10-year Bund yields have broken below its short-term rising trendline. There has been RSI divergence for quite some time indicating a weakening and possible exhaustion of the bullish trend
Maybe that was the peak. However, RSI is still above 40 threshold i.e., in positive sentiment, a close below 40 will change that.
Some support at the 0.618 retracement at 2.34 and at the 0.786 at 2.15.
Strong support at around 1.92-1.74.
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