Technical Update - US 10-year Treasury yields could reach 5% in 2023. 3.50% is key support Technical Update - US 10-year Treasury yields could reach 5% in 2023. 3.50% is key support Technical Update - US 10-year Treasury yields could reach 5% in 2023. 3.50% is key support

Technical Update - US 10-year Treasury yields could reach 5% in 2023. 3.50% is key support

Bonds 3 minutes to read
KCL
Kim Cramer Larsson

Technical Analyst, Saxo Bank

3.50 % is key for the short-and medium-term outlook on US 10-year Treasury yields. 4.75-5.00% could be reached in early 2023


Summary
3.50 % is key for the short-and medium-term outlook. 

Medium- to longer term i.e., going in to 2023 I see US 10-year Treasury Yields going to 4.75-5.00%
A correction down to around 3.64 before a bounce to resume uptrend that could take yields to new highs in 4.75-5.00% in 2023
However, for the better part of the rest of 2022 we could see Yields being range bound between 3.50 and 4.25. A daily close below  3.50 a move to around 3.22 is likely.

Short-term:
Yields has formed a double top like pattern with potential down to around 3.50. However, it is not the most perfect pattern hurting the performance.
Bouncing from 0.786 Fibo retracement of the October up-leg at 3.73 the down ward move could be over. However, an exhaustive move down move to 3.64 % should not be ruled out – see medium-term outlook.
RSI has been rejected twice now at RSI 40. If RSI cannot close below 40 Bullish sentiment remains i.e., and yields are set to rebound from here. If yields get back above 4% uptrend is likely to resume for new highs.

 

Source: Saxo Group

Medium-term: Weekly chart. A correction down to 0.382 retracement at 3.64 seems likely. There is divergence on RSI (peaks on RSI are falling when prices are rising) indicating a weakening of the uptrend and a correction is unfolding.
Hard to predict the size of the correction but if US 10-year Treasury Yields close below 3.50% we could see it at 3.21 possibly 2.92. A spike below 3.50 is not unlikely but it would be a daily close that is decisive.  

Source: Bloomberg

Longer-term/going in to 2023: Within a few points US 10-year Treasury Yields reached 1.382 Projection of the 2019-2020 downtrend before retracing.
Monthly RSI is bullish and there is no divergence indicating we should expect new highs into 2023. US 10-year Treasury Yields has no strong resistance until around 5% which is also close to the 1.618 projection of the 2019-2020 correction.

Depending on the size of the current correction i.e., where it will bottom out, it could give energy for a move to 4.75-5.00%.  

For this bullish scenario to be demolished a close below 2.50 is needed.

Source: Bloomberg
Disclaimer

The Saxo 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 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 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 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 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 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-sg/legal/disclaimer/saxo-disclaimer)

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Saxo Markets
88 Market Street
CapitaSpring #31-01
Singapore 048948

Contact Saxo

Select region

Singapore
Singapore

Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-sg/about-us/awards.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website are not intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.