Technical Analyst, Saxo Bank
The 10-year US Treasury Yields broke above the short-term falling trendline yesterday and is now in a short-term uptrend but currently finding resistance at the 0.382 retracement.
If yields can close above the 0.382 retracement level and get back above the 55 SMA just below 3% there is resistance at 3.11 and around the 0.618 retracement. A close above is likely to push Yields to test June highs above 3.5%.
If on the other hand Yields drop back below the falling trend line bear trend is likely to resume for a move towards 2.55 key support.
As described in previous Technical Update on Yields the 10-year US T-Note Future formed a Bearish Engulfing top and reversal last week. The future has now broken below its rising trendline and could be set for a test of key support at 117 18/32. If the future closes below the key support June lows are in the cards.
The Euro Bund future is testing the lower rising trendline. A close below is likely to lead to a sell-off down to key support at 149.75.
If the Bund future manages to stay above the trendline and crawl back above 157.74 strong resistance at 159.79 is likely to be tested.
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.