Sunday, July 2, 2017
DET10Y German 10-Year Bund Yield and UST10Y 10-Year Yield Daily Charts
Yields jump last week after the central bankers, especially BOE Governor Carney and BOC Governor Poloz, hint that rate rises are coming later this year. The central bankers are the market.
Both the bund yield and US yield move sideways through the blue channels. The German bund continues through this channel and is now testing the top rails. The bund leaps from 0.25% to 0.47% last week a huge 22 basis point move. The US 10-year yield jumped from 2.14% to 2.31% a 17 bip move. The US-German 10-year yield spread narrows from 189 bips to 184 bips. The spread was about 210 bips in March.
In April, the US 10-year fell below the blue channel. Yield tried to return into the sideways channel but could not and is now moving through the seven-month downward-sloping channel (purple). Interestingly, the yields jump after President Trump wins the November presidential election, however, US yields have been trending lower ever since (purple channel).
So US yields are in a downtrend while bunds are sideways and potentially threatening a breakout higher. The charts are moving in lock-step. The 0.48%-0.50% area is important this week for the bund and the 2.30%-2.35% level for the US 10-year yield (top trend line). The euro, US dollar index and bund and US yields will likely spend a lot of time moving sideways going forward.
The 50-month MA for the US 10-year is 2.24% serving as support. Ditto the 50-day MA at 2.25%. The 50-week MA is at 2.14% and 20-week MA resistance is 2.32 the exact bracket that yield moved through last week. Thus, US bond bears win big if the 10-year yield moves above 2.30-2.32% (lower prices higher yields; inflationary behavior) while the bond bulls win big if yield falls below 2.14% (higher prices lower yields; deflationary behavior). The 2.14%-2.31% range is noise. Keystone does not hold any positions in Treasuries currently.
This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
Note Added Early Wednesday Morning, 7/5/17: US markets are coming back on line after the holiday with the bund at 0.49% and US 10-year at 2.35%. Yields are teasing the breakout levels highlighted above. Yields will either bounce or die from this pivot point.