US 10-year yields to confirm a base on a break above 1.705% – Credit Suisse

US 10-year Bond Yields have again held key support at 1.68/705% and have collapsed back into their range over the past few sessions as the Omicron variant rattles financial markets, with the market now testing key resistance at the 1.415% low. Economists at Credit Suisse expect this level to hold.

Break below 1.415% would open up a deeper rally

“We look for the 1.415% level to hold into the daily close and for a reversal back into the prior range.”

“Ultimately, key moving averages are still rising and momentum is still modestly bearish, suggesting there is still a very real possibility of a much larger yield basing structure, especially if risk-sentiment stabilizes. Such a base though would only be seen confirmed as flagged above 1.705%.”

“A break below 1.415% would open up a deeper rally, with the next resistance seen at the potential uptrend from the August 2020 low at 1.33%.” 

“The repeated holds below the downtrend/potential ‘neckline’ from 2019 at 1.68/705% suggests there is a risk that the market may be moving into a medium-term ranging environment, however, this is not our base case and for now we still believe in the broader yield basing theme.”