Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
Technical Update - US, EU & UK yields are on the rise testing resistance levels
Kim Cramer Larsson
Technical Analyst, Saxo Bank
Summary: US 2-year Treasury yields have broken bullish out of its Symmetrical Triangle
US 10- and 30-year Treasury yields are in a bullish trend testing 2022 peak
EuroBund 10-year yields trading in a slightly rising channel
UK 10-year Gilt yields are testing the July peak
US 2-year Treasury yields have broken bullish out of its Symmetrical Triangle like pattern and seems set to test the key strong resistance at around 5%
If closing above the road to 5.21 level is paved. However, a spike up to 5.32 should not be ruled out.
An instrument often moves 1.618 projection after a triangle breakout.
RSI is showing positive sentiment indicating higher yields.
To demolish this picture a close below 4.64 is needed
US 10-year Treasury yields are in a bullish trend close to be testing 2022 peak at 4.32. A pike up to the 1.618 projection at 4.34 is quite possible.
RSI is showing positive sentiment but currently there is divergence indicating a weakening of the bullish trend. However, if yields are closing above 4.32 the divergence is likely to be cancelled indicating further upside potential.
To reverse the uptrend a close below 3.95 is needed. If yields drop back below 4.15 without cancelling the RSI divergence the bullish picture could have come to an end.
US 30-year Treasury yields are testing the 2022 peak at around 4.42. Uptrend is strong with no RSI divergence (at the moment) indicating higher levels. A spike up to the 1.618 projection at 4.47 could be seen.
To reverse the uptrend a close below 4.14 is needed. If yields drop back below 4.30 the bullish picture is likely to be demolished.
The EuroBund 10-year yields are still trading in a slightly rising channel close to be testing the upper rising trend line and resistnace at around 2.77.
There is minor RSI divergence, peak values are at same level i.e., not a clear signal. Yields are however, still in an uptrend and have closed above July peak suggesting higher levels. 2.77 is likely to be tested and broken. A move to 2.83 is in the cards.
However, if yields are closing below 2.63 we could see a short-term correction to around 2.55-2.50
A close below the lower rising trendline in the channel will demolish the bullish picture. A close below 2.40 will reverse it
The UK 10-year Gilt yields are testing the July peak at around 4.71. A minor set back should be expected.
But despite RSI divergence there is likely to further upside potential. 4.90-5.06 i.e., 1.382-1.618 projection are in the cards.
To reverse the uptrend a close below 4.30
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