Technical Analyst, Saxo Bank
US 10-year Treasury Yields has been hovering around its short-term rising trendline the past week following a minor correction down to 3.90%.
Now uptrend seems to resume and will be confirmed if yields close above resistance at 4.25%, and if RSI closes above its falling trendline.
If that scenario plays out yields could extend its uptrend to the 1.382 projection of the October correction at around 4.50%.
However, yields could move higher going in to end year and 2023.
There is no strong resistance until around 5% which is the 1.618 projection of the 2018-2019 collapse is around 5.08% and levels not seen since prior to the Subprime crisis.
A spike up to 5.3% is not unlikely.
For yields to demolish the short-term uptrend a close below 3.89 is needed.
The Euro Bund future seems to be trading in a slightly falling channel failing to test key resistance at 142.62. If Euro Bund keeps sliding lower and RSI closes below its rising trend line selling pressure is likely to accelerate and Euro Bund to test October low at 134.02 but is likely to trade lower.
If Euro Bund takes out 134 it is likely to extend the down trend the Fibonacci extension level at 130.66 possibly dropping to the 1.618 projection of the June to August correction at 128.91.
However, there is no strong support until around 119.86-121.06. See monthly chart
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.