Technical Update - US and EU 10-year yields higher but signs of trend exhaustion on the futures. Which one is right? Technical Update - US and EU 10-year yields higher but signs of trend exhaustion on the futures. Which one is right? Technical Update - US and EU 10-year yields higher but signs of trend exhaustion on the futures. Which one is right?

Technical Update - US and EU 10-year yields higher but signs of trend exhaustion on the futures. Which one is right?

Bonds 3 minutes to read
KCL
Kim Cramer Larsson

Technical Analyst, Saxo Bank Group

Summary:  US 10-year Treasury yields testing previous peak. Could move to 4.48. Treasury Future showing signs of trend exhaustion. Which one will be right?
EU/German 10-year yields slowly grinding higher towards 277 as the Bund future is making new low


US 10-year Treasury yields have been rejected at previous peak at 4.36%. Trend is still up, however, and yields seem set for a move to 4.48% i.e., the 1.382 projection of the latest correction but could spike up to the 1.618 projection at 4.55

No divergence on RSI supports the bullish scenario

To demolish and reverse this a close below 4.04 is needed. First indication of this scenario to play out would be a move below lower rising trendline

Source all charts and data: Saxo Group

The 10-year Treasury Note future is showing s lightly different picture in terms of RSI divergence. RSI divergence is indication the (down)trend is weakening.
RSI is still showing negative sentiment and is moving above 40 threshold. If closing back below there is great likelihood the future will take out the strong support at 108 26/32. A move down to the 1.382 projection at around 107 29/32 could be seen.
Weekly chart shows why 108 26/32 is strong key support. The future has bounced twice from there.

If sellers are failing to push the future to close below the 108 26/32 level a rebound that would break the upper falling trendline is in the cards.
If that scenario plays out key resistance at around 111 13/32. A close above will establish an uptrend.

RSI divergence on both daily and weekly is indicating downtrend exhaustion on both short – and medium-term.
However, a future close below 108 26/32 is likely to push daily RSI to close below its rising trendline thus confirming resuming of the downtrend
Bottomline: 108 26/32 is key

The German Gov’ment 10-year yields are still on the rise moving in a rising channel pattern closing in March peak at 2.77.
A close above could see yields move to test the upper rising trendline and spike up to the 1.382 projection at 2.84%.

To demolish the bullish trend a close below 2.55 is needed. To reverse the trend a close below 2.45
Source: Tradingview
The EuroBund Future has closed below support at around 130.14 thus extending the downtrend.

The bottom and reversal pattern on the weekly chart (circled) has been cancelled as the EuroBund future is continuing lower.
This despite RSI divergence, and the Future sees no strong support until around 125.22 I believe that if the Bund future is dropping to the 1.382 projection at 128.92 a correction to set in, but a spike down to the 1.618 projection at 128.16 should not be ruled out.

For the EuroBund future to reverse the down trend a close above 133.34 is needed.
First indication of that scenario to play out is a close above the upper falling trendline

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)

Saxo
40 Bank Street, 26th floor
E14 5DA
London
United Kingdom

Contact Saxo

Select region

United Kingdom
United Kingdom

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo is a registered Trading Name of Saxo Capital Markets UK Ltd (‘Saxo’). Saxo is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871. Registered in England & Wales.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo assumes no liability for any loss sustained from trading in accordance with a recommendation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc.

©   since 1992