Technical Analyst, Saxo Bank
Summary: US 2 and 5-year Treasury yields have formed bottom and reversal patterns followed by falling trend line break out
10-year yields confirmed bottom reversal pattern but still below falling trendline
30-year in wait and see position
US 2-year Treasury yields formed a bottom and reversal pattern last week in the form of a Morning Doji star. (circled)
With the close yesterday above the upper trend line in its falling channel like pattern the 5-year Treasury yields have established a short-term uptrend.
Key resistance at 4.45. A close above 4.45 2-year yields will have resumed uptrend with short-term potential to test Q4 2022 peak at around 4.79.
To resume downtrend a close below 4.00 is needed.
10-year yields seems to have found support at 3.32 and the 200 daily SMA forming what looks like a double bottom pattern that was confirmed with the close above 3.58 yesterday.
Still moving below the upper trend line in its falling channel like pattern though, and needs to close above to indicate trend reversal.
If breaking above the falling trendline there is short-term potential to 3.90 resistance. Minor resistnace at around 3.73.
30-year Treasury yields are still moving in its Symmetrical triangle like pattern. Break out needed for direction.
RSI is bullish however, indicating upper falling trendline is likely to be tested and broken. A close above 3.72 will confirm Double bottom pattern to unfold and the establishment of an uptrend strongly indicating the falling trendline will be broken.
If that scenario plays out there is no strong resistance until around 4%
To reverse this likely bullish trend a close below 3.50 is needed.
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.