Technical Analyst, Saxo Bank Group
US 10-year yields dipped just below the key support at 3.50% reaching 2.0 projection of the double top pattern formed in October-November (green Fibo on the chart)
Yields seem to be ready for a rebound despite no RSI divergence. A rebound that could take US 10-year yields to key resistance at 3.90%
However, if Yields close below 3.50% further downside pressure is likely to around 3.22 i.e., the 0.618 retracement and close to 200 daily SMA.
For the medium-term scenario see previous analysis: https://www.home.saxo/content/articles/bonds/ta-us-10-year-yields-16112022
The US 10-year Treasury Note future has formed an Evening Doji pattern on daily time period (circled) after being rejected at the 100 daily SMA. The pattern indicates a top and reversal. If the T-Note future does not move higher to close above 114 29/32 it could drop to support at 111 31/32.
A close below that level the future will be looking at October-November lows around 109.
I close above 114 2/32 will cancel the top and reversal pattern with potential to around 117.
Euro Bund future has been rising in a channel/wedge like formation only to be rejected at 142.62 resistance level. A close above 142.62 is likely to pave the way for Euro Bund to climb to resistance at around 149.25. The declining daily 100 SMA will provide some resistance
There is divergence on RSI indicating the rebound could be over.
However, it needs to be confirmed by the Future breaking below its lower rising trendline followed by a close below 139.78.
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.
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