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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- and 10-year Treasury yields and Notes. German 10-year Government Bond yield and Bund future
Kim Cramer Larsson
Technical Analyst, Saxo Bank Group
Summary: Both US and European Government yields dropped sharply the past week to test key levels. It is now correction time and yields are set to regain lost grounds. but how much?
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Today's Market Quick Take from the Saxo Strategy Team
US 2-year Treasury yields broke below 4% support and dipped below the falling trendline only to close above and to close above the 200 daily Moving Average (MA).
During the downwards move RSI has shown divergence indicating an exhaustion of the trend. This morning 2-year yields are crawling back above 4% and if closing above we could see further upside to the 0.618 retracement at 4.47.
Minor resistance at 4.22 which will be key for further upside and resistance around the 55 and 100 daily Moving Averages.
A drop back below the 200 daily MA would strongly indicate down trend to resume and be extended below the falling trendline
Today's Market Quick Take from the Saxo Strategy Team
US 2-year Treasury yields broke below 4% support and dipped below the falling trendline only to close above and to close above the 200 daily Moving Average (MA).
During the downwards move RSI has shown divergence indicating an exhaustion of the trend. This morning 2-year yields are crawling back above 4% and if closing above we could see further upside to the 0.618 retracement at 4.47.
Minor resistance at 4.22 which will be key for further upside and resistance around the 55 and 100 daily Moving Averages.
A drop back below the 200 daily MA would strongly indicate down trend to resume and be extended below the falling trendline
US 2-year Treasury Note future spiked to the 1.382 projection of the January-February downtrend. If closing below 103 8/32 a correction down to around 102 13/32 could be seen.
US 10-year Treasury yields spiked below January/February trough and support at 3.32 only to bounce strongly. At the time of writing back above the 200 daily MA and could bounce further. If breaking above 3.60 there could be upside to the 0.618 retracement at around 3.78.
For 10-year yields to resume downtrend a close below 3.32 is needed. If that occurs a move to around 35 would be in the cards
Levels on the Treasury Note future: Spiked above January peak at 116 8/32 to collapse and now back below 200 daily MA. A correction down to the 0.618 retracement at 112 26/32 could be seen.
A close above 116 8/32 will extend uptrend possibly up to around 118 15/32
German Government Bond 10-year yield spiked just below support at around 1.97 to just a few points from the lower medium-term rising trendline. Yields has rebounded strongly and if moving above 2.97 a 0.618 retracement at around 2.45 could be seen. If yields closes back below 1.97 a new downtrend is likely to around 1.76 support
EuroBund future ran out of steam a few cents below resistance at around 140.68. If closing back below 136 bear trend is likely to resume.
For the Bund future to break bullish a close above 140.68 is needed. That could lead to a move to around 143.38 resistance
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