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 yields bounce from key support. Euro Bund rejected at resistance
Kim Cramer Larsson
Technical Analyst, Saxo Bank Group
US 10-year yields bounce from key support at 3.50%. Bounce is in the cards
US 10-year Treasury Note future rejected at key resistance forming a top and reversal pattern
Euro Bund future rejected at key resistance. Next few days could be decisive
US 10-year yields dipped just below the key support at 3.50% reaching 2.0 projection of the double top pattern formed in October-November (green Fibo on the chart)
Yields seem to be ready for a rebound despite no RSI divergence. A rebound that could take US 10-year yields to key resistance at 3.90%
However, if Yields close below 3.50% further downside pressure is likely to around 3.22 i.e., the 0.618 retracement and close to 200 daily SMA.
For the medium-term scenario see previous analysis: https://www.home.saxo/content/articles/bonds/ta-us-10-year-yields-16112022
The US 10-year Treasury Note future has formed an Evening Doji pattern on daily time period (circled) after being rejected at the 100 daily SMA. The pattern indicates a top and reversal. If the T-Note future does not move higher to close above 114 29/32 it could drop to support at 111 31/32.
A close below that level the future will be looking at October-November lows around 109.
I close above 114 2/32 will cancel the top and reversal pattern with potential to around 117.
Euro Bund future has been rising in a channel/wedge like formation only to be rejected at 142.62 resistance level. A close above 142.62 is likely to pave the way for Euro Bund to climb to resistance at around 149.25. The declining daily 100 SMA will provide some resistance
There is divergence on RSI indicating the rebound could be over.
However, it needs to be confirmed by the Future breaking below its lower rising trendline followed by a close below 139.78.
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