US 10yr Yields: Multi-decade downtrend over but a more protracted consolidation has been forming – Westpac

Daily divergence on the most recent slide in US 10yr yields suggests that the corrective pullbacks from 2.64% are nearing completion explains Tim Riddell, Research Analyst at Westpac.

Key Quotes

“Risk of a full 50% (1.98%) retracement cannot be ruled out, but a close (esp. weekly) above 2.225% could trigger a squeeze to at least the 2.37-2.43% area”

“Weekly

• Weekly momentum has reached downside extremes. Although a turn is not yet apparent, some indicators are showing potential of an imminent turn
• Yield pullbacks since December are decidedly corrective and have held standard retracement levels. This is also indicative of an eventual return to higher yields”

“Monthly

• Monthly momentum may now be mixed with some indicators decidedly neutral whilst others are rolling against the previous trend
• The style of yield moves since December is corrective, suggesting that a multiyear downtrend completed in 2016, even if a break higher is still to be confirmed”