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10 Feb 2015
US 10-yr yield painting double bottom on the charts – KBC
FXStreet (Barcelona) - The KBC Bank Research Desk shares the technical outlook for US 10-yr yields, and further expects a break higher to be supportive of a Fed hike.
Key Quotes
“Global core bonds initially profited from a bout of Greek-induced risk aversion, amid an empty eco calendar. Weaker Chinese trade balance data and policy divisions about the Ukrainian conflict also weighed on sentiment, taking the gloom off better German export data.”
“As US traders entered the scene, core bonds lost some (Europe) to all (US) of the intraday gains. Apparently, traders hadn’t forget about Friday’s stellar payrolls report yet. At the end of the session, the US yield curve traded 0.2 bps (2-yr) to 2.8 bps (5-yr) higher."
“Technically, the US 5-yr yield remains firmly above the 1.40% neckline of a double bottom (target 1.65%), confirming Friday’s break higher.”
“Importantly, the US 10-yr yield closed above the neck line (1.95%; target 2.25%) of a similar formation as well.”
“If the break higher is confirmed, the technical picture would confirm what the “fundamentals” are saying: more upward potential in US yields as Friday’s stellar payrolls comforts the Fed to go along with the normalization of its policy.”
“A June rate hike is still our basis scenario.”
Key Quotes
“Global core bonds initially profited from a bout of Greek-induced risk aversion, amid an empty eco calendar. Weaker Chinese trade balance data and policy divisions about the Ukrainian conflict also weighed on sentiment, taking the gloom off better German export data.”
“As US traders entered the scene, core bonds lost some (Europe) to all (US) of the intraday gains. Apparently, traders hadn’t forget about Friday’s stellar payrolls report yet. At the end of the session, the US yield curve traded 0.2 bps (2-yr) to 2.8 bps (5-yr) higher."
“Technically, the US 5-yr yield remains firmly above the 1.40% neckline of a double bottom (target 1.65%), confirming Friday’s break higher.”
“Importantly, the US 10-yr yield closed above the neck line (1.95%; target 2.25%) of a similar formation as well.”
“If the break higher is confirmed, the technical picture would confirm what the “fundamentals” are saying: more upward potential in US yields as Friday’s stellar payrolls comforts the Fed to go along with the normalization of its policy.”
“A June rate hike is still our basis scenario.”