Technical Update - US 10-year yields could drop to 3.22. US and EU interest rate futures in uptrends. UK Gilt could be range bound Technical Update - US 10-year yields could drop to 3.22. US and EU interest rate futures in uptrends. UK Gilt could be range bound Technical Update - US 10-year yields could drop to 3.22. US and EU interest rate futures in uptrends. UK Gilt could be range bound

Technical Update - US 10-year yields could drop to 3.22. US and EU interest rate futures in uptrends. UK Gilt could be range bound

Bonds 4 minutes to read
KCL
Kim Cramer Larsson

Technical Analyst, Saxo Bank

Summary:  US 10-year Treasury yields broke below key support and could drop to 3.22. The future is in an uptrend looking at key resistance at 117
Euro Bund continues strong bounce off lows breaking bullish out of falling wedge. 143.38 is key resistance
UK Gilt seems to be struggling for momentum and could be range bound for quite some time


Today's Saxo Market Call podcast.
Today's Market Quick Take from the Saxo Strategy Team

US 10-year Treasury yields closed yesterday below key support at around 3.41. Yields are set for lower levels and is likely to drop below 200 daily SMA and test 0.618 retracement at 3.22. That is also the 1.382 projection of the December correction.

Source all charts and data: Saxo Group

US 10-year Treasury Note future is in an uptrend short-term after its close yesterday above 115 12/32 and could be forming a rising channel like pattern. 
Currently testing 200 daily SMA and seems likely to move higher to the 0.618 retracement at 117. RSI above 60 and no divergence supports the short-term bullish picture.
Medium-term the T-Note has reversed the downtrend if it closes the week above 115 12/32. 117 could be key for the T-Note. If the T-Note gets rejected at 117 AND RSI does not close above 60 threshold on weekly chart we could see selling returning.

Euro Bund future is continuing its strong bullish bounce supported by RSI above 60 and Bollinger bands expansion i.e., in positive sentiment. The Euro Bund is set to move higher to test key resistance at 143.38.
On weekly chart we can see Euro Bund has broken bullish out of its falling wedge like pattern. A move to the 0.382 retracement of the wedge at 143.03 is likely. Just a few points below key resistance at 143.38. RSI breaking above its upper falling trend line supports this bullish scenario.
If Euro Bund manages to close above 143.38 we could see further upside to the 0.618 retracement at 149.40.
If selling pressure returns and push the Bund future to close below 136 down trend is set to resume.

 

UK Gilt seems to be struggling getting past the 0.618 retracement level at 105.20 despite RSI being above 60 and thereby in positive territory. If it succeeds there is strong resistance at around 108.92. The declining daily 200 SMA will provide resistance around that level.
Gilt could be range bound between 109 and 99 for quite some time.

Medium-term: The gap on the weekly chart is crucial for Gilt. If Gilt closes the gap new lows are likely. If Gilt can close above 108.92 there is upside potential to 0.786 retracement at 113.54.

 

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 is not intended to and does not change or expand on this. 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/legal/disclaimer/saxo-disclaimer)
- Full disclaimer (https://www.home.saxo/en-mena/legal/disclaimer/saxo-disclaimer)


Boulevard Plaza, Tower 1, 30th floor, office 3002
Downtown, P.O. Box 33641 Dubai, UAE

Contact Saxo

Select region

UAE
UAE

Trade responsibly
All trading carries risk. Read more. 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

Saxo Bank A/S is licensed by the Danish Financial Supervisory Authority and operates in the UAE under a representative office license issued by the Central bank of the UAE.

The content and material made available on this website and the linked sites are provided by Saxo Bank A/S. It is the sole responsibility of the recipient to ascertain the terms of and comply with any local laws or regulation to which they are subject.

The UAE Representative Office of Saxo Bank A/S markets the Saxo Bank A/S trading platform and the products offered by Saxo Bank A/S.