On the other side of the Atlantic, Treasury yields were muted during the Federal Reserve decision yesterday. Even though the Fed didn't deliver on market expectations, ten-year yields went nowhere near the pivotal 1% level that we have been monitoring in the past few months. It was enough for the Fed to signal it will hold rates near zero until 2023, and that it will continue with its bond-buying program, to kill volatility in the bond market. The Fed specified that this program would continue until it does not see a "substantial" improvement in unemployment and inflation. The word "substantial" is vague, and for as much as the market knows, adequate unemployment numbers and inflation might be reached as fast as next year. I expect the reflationary narrative to find momentum as a stimulus bill is passed and Biden enters the White House.
Teb-year yield can only rise. At present, yields are trading on the lower part of the ascending wedge they have been trading in from August until today. However, if we consider that a democratic white house and a fiscal stimulus are coming, hence yields should break the pivotal 1% and test the upper resistance line above that level. Bond yields have an inverse relationship with bond prices.