Technical Analyst, Saxo Bank
Pre-text from previous Yields update of 23rd March
US 10-year Treasury yields has been in a falling trend since the early 1980’s forming a long falling channel (two dark blue parallel lines). In 2018 yields raised sharply breaking out of the channel only to dropping back below a few months later to lowest ever level below 1% in 2020. Since the 2020 low the yield has been on the rise again breaking above the upper falling trend line.
With the sell-off in US Treasuries overnight continuing this morning the 10 year yields have broken the upper (parallel shifted) trend line and is currently testing the 200 Monthly SMA.
If yields break above the 200 SMA we are likely to see 10 year yields reaching 3.15% which is 100% of the Head to Neckline distance in the inverted Shoulder-Head-Shoulder pattern. However, the 2018 peak at around 3.25% is not unlikely to be tested.
The 10 year Treasury Future has broken below the key support at 121. No strong support before around 117½
The two-year yields is broken above the decennial falling trend line and is on course to test 2018 peak at around 2.85%
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.