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 and 10 year Treasury yields
Kim Cramer Larsson
Technical Analyst, Saxo Bank Group
Pre-text from previous Yields update of 23rd March
US 10-year Treasury yields has been in a falling trend since the early 1980’s forming a long falling channel (two dark blue parallel lines). In 2018 yields raised sharply breaking out of the channel only to dropping back below a few months later to lowest ever level below 1% in 2020. Since the 2020 low the yield has been on the rise again breaking above the upper falling trend line.
With the sell-off in US Treasuries overnight continuing this morning the 10 year yields have broken the upper (parallel shifted) trend line and is currently testing the 200 Monthly SMA.
If yields break above the 200 SMA we are likely to see 10 year yields reaching 3.15% which is 100% of the Head to Neckline distance in the inverted Shoulder-Head-Shoulder pattern. However, the 2018 peak at around 3.25% is not unlikely to be tested.
The 10 year Treasury Future has broken below the key support at 121. No strong support before around 117½
The two-year yields is broken above the decennial falling trend line and is on course to test 2018 peak at around 2.85%
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