Head of Fixed Income Strategy
As bond markets experience a widespread sell-off across various tenors, the US Treasury is gearing up to auction $13 billion worth of the infamous 20-year bonds (US912810TZ12) on Wednesday.
The 20-year maturity stands out due to its notorious illiquidity within the US yield curve. Reintroduced in May 2020 during the Covid pandemic to bolster the US Treasury's debt-raising efforts, it had been discontinued in 1986. This explains why it offers a substantial yield pick up over 30-year bonds, approximately 10 basis points higher.
Let's delve into the advantages and drawbacks of the upcoming 20-year US Treasury auction to ascertain whether weak bidding metrics might accelerate the uptick in yields.
US 20-year Treasury yields are currently trading around the 0.618 retracement at 4.88. The trend is bullish supported by RSI indicating 20-year yields are likely to move higher towards the 0.786 retracement and resistance area at around 5.05-5.20. To reverse this bullish trend a close below 4.42 is required. (Courtesy of Kim Cramer Larsson)
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Chief Investment Strategist
Quarterly Outlook
Head of Fixed Income Strategy
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Chief Investment Strategist
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Chief Investment Strategist
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Chief Investment Strategist
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Chief Investment Strategist
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Head of Fixed Income Strategy
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