US 10-year yields seem to have found a bottom – UOB
15.08.2022, 12:39

US 10-year yields seem to have found a bottom – UOB

FX Strategist Quek Ser Leang at UOB Group’s Global Economics & Markets Research assesses the recent performance of the US 10-year yields.

Key Quotes

“In our Chart of the Day update from late last month (29 Jul 2022), when US 10-year treasury yield was at 2.688%, we highlighted that ‘the risk for 10-year yield is still clearly on the downside’ and indicated ‘the next support levels are at 2.557% and 2.500%’. We added, ‘resistance is at 2.900% (55-day exponential moving average) but only a break of the declining trend-line (currently at 2.975%) would indicate that the downside risk has dissipated’.

“The 10-year yield subsequently dropped to 2.516% before rebounding strongly on the same day. The price actions led to an ‘outside reversal bar’ formation. After the reversal bar, the 10-year yield edged higher until yesterday (11 Aug) when it not only broke the declining trend-line resistance but also closed above the 55-day exponential moving average. The technical developments and price actions suggest that the downside risk for 10-year has dissipated. To look at it another way, 2.516% is likely a bottom and this level could hold, at least for several weeks.”

“While the 10-year yield has found a bottom, it is premature to expect a major reversal. From here, the 10-year yield is likely to trade between the 2.516% low and 3.103%. Both July’s high and the top of the daily Ichimoku cloud are at 3.103%. A break of this solid resistance level would greatly increase the odds for a sustained advance in the 10-year yield.”

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