US 10Y TREASURY: PCE and NFP aheadDuring the previous week there has been a lack of new macro data which would point to markets the course of inflation and potential next Feds move regarding interest rates. Still, the markets are watching closely any statements from Fed officials, and trying to position according to the current sentiment. Considering that statements from Feds officials were pretty cautious regarding the future rate cuts, the markets reacted by increasing yields. The US 10Y benchmark started the week by testing the 4,0% level, and moved to the highest weekly level at 4,25%. Yields eased on Friday, ending the week at 4,18%.
The week ahead is bringing a release of new PCE and Non-farm payrolls data, which would most certainly bring some increased volatility back to the market. There is the potential that the yields might continue to slow down during the week, however, in case of any surprises related to macro data, yields could also hit the 4,25% level for one more time.
Government bonds
German 10 year bund (yield chart) giant HS patternGerman 10 year bund keeps scaling.
Price action is reflected on the charts. On the long term, seems like the german 10 year bund is building a huge Head and Shoulders pattern. That would be consistent with rates going down in the eurozone.
But… if the German bund should spike over 2.50%, that would probably mean that euro rate cuts will be on hold for longer than expected.
IMO, it’s all about geopolitics, as it’s also related to oil/natural gas supply from the east, commercial war with the USA, China and India, etc. all of them are inflationary and would also be pushing government spending to the upside on military and defense systems, detracting investment capacity from the private sectors…
All to be seen in coming weeks… any insights you would like to share about the topic, please let me know!
US 10Y Yields - Bullish Rip To PremiumYields opened the week inside a discount price range (below 4.169%) and closed above equilibrium, with the next draw on liquidity being buyside liquidity @ 4.292%.
However, I see the potential for a draw up to buyside 50/50% and will be sitting on my hands awaiting for more data to make a educated decision where the overall direction will be.
US 10-Year Government Bond Yield Analysis(What we need to know)!Today, I want to analyze the US 10-Year Government Bond Yield ( TVC:US10Y ) for you in the weekly time frame . In fact, the US 10-Year Government Bonds shows the yield rate of ten-year US Treasury bonds and is a measure of investors' confidence in the US economy . As such, this index influences capital allocation across various markets and impacts broader financial conditions .
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The US 10-Year Government Bond Yield(US10Y) started its upward trend after COVID-19 . After breaking the Important Resistance line and 200_SMA(Monthly) , we can hope for the continuation of US10Y's upward trend. (The Important Resistance line started in 1981 , so it was very important.)
According to the Elliott wave theory , US10Y seems to be completing main wave 4 , so main wave 3 was of the Extended type . If the upper line of the descending channel breaks, we can be more sure of the end of main wave 4.
I expect US10Y to rise at least as wide as the descending channel width and up to the Resistance zone(5.55%-4.92%) after the descending channel break , completing the main wave 5 . If the Resistance zone(5.55%-4.92%) is broken, we can expect a further increase in US10Y .
Now let's see if the US 10-Year Government Bond Yield(US10Y) increases , what will be the effect on other assets?
Impact of Rising 10-Year Bond Yields on Key Assets:
Bitcoin( BINANCE:BTCUSDT ) and Other Cryptocurrencies : As bond yields increase, riskier assets like Bitcoin may face downward pressure. Investors are often drawn to safer investments, such as bonds, when yields rise, making cryptocurrencies less attractive.
Gold( OANDA:XAUUSD ) : Higher bond yields usually put pressure on gold prices. Since gold does not offer any yield, a rising yield on bonds increases the opportunity cost of holding gold, causing a potential decline in its price.
U.S. Stocks : Rising bond yields can lead to lower stock values, particularly in riskier sectors like tech. Higher bond yields often translate into increased borrowing costs, impacting growth and profitability, especially for companies that rely heavily on credit.
US 10-Year Government Bond Yield Analyze (US10Y%), Weekly time frame⏰.
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Bearish Divergence in Yield SUN10Y?I foresee Bearish Divergence between TVC:ID10Y and RSI 14
Meaning that the rise of the Indonesia bond yield will reverse, before it touch Resistance.
The rise has been a Pullback (a rise after Breakdown Support, just to test a new Resistance).
The story will be different if Yield successfully Breakout 6.9%
US bond bloodbath powers USD/JPY above key levelHigher US Treasury yields has propelled USD/JPY through the 200DMA and 151.95, the latter an important technical level corresponding with prior episodes of Bank of Japan intervention.
If it manages to hold above 151.95, traders could consider buying the break with a tight stop either below it or the 200DMA for protection. There's little visible resistance evident until above 155, and even then it's minor. 155.40 is one potential target.
Given yield differentials between the US and Japan, you could argue USD/JPY should be higher based on where it traded earlier this year when spreads sat at similar levels.
US 10Y Yields - 2nd Bullish Leg Up To Equalibrium?Based on the last post on Yields, I was projecting a draw towards equilibrium; 4.169% with the possibility for a short term retracement down to the NWOG highly likely.
I would like to see the neighbouring FVG respected with the last line of defence @ 4.026% held throughout next week
US 10Y TREASURY: retail sales eased the sentimentThe US Treasury market was under influence of the posted data for the Retail Sales in the US in September, as a potential add-on to the total inflation in the country. Released data were in line with the market consensus, as the indicator was higher by 0,4% in September, leading to yearly increase of 1,7%. Without other posted data which would add to the potential move of the inflation in the US, the 10Y US yields eased a bit, and tested the 4,0% level. Still, at Friday trading session, yields ended the week a bit higher, at the level of 4,075%.
In the week ahead there are no macro data scheduled for a release, which could point to potential inflation movements, in which sense, it could be expected a relatively calmer week when US yields are in question. There is some probability that yields could test the 4,0% level for one more time, while odds are quite low for the move toward the upside.
Bond Divergences: ECB Under Pressure from FedThe European Central Bank (ECB) is under pressure to cut interest rates for the third time this year, prompted by the surprise 50 basis point cut announced by the U.S. Federal Reserve (Fed) in September. Although the ECB had planned to wait until December to make another cut, recent economic data, such as weak PMIs and falling inflation in the Eurozone, have forced its hand, making an October cut inevitable. As the Fed slows its cutting cycle, the ECB seems trapped with no choice but to press ahead, despite the risks of further euro depreciation and rising inflationary pressures. The divergence between the monetary policies of the two central banks also reflects a widening gap in bond markets.
In this context, the gap between US and German bonds continues to widen. US 10-year bond yields have risen sharply, while in Germany the increase has been minimal, reaching a gap of 183 basis points, the widest since July. According to Goldman Sachs, this gap could reach 200 points in the coming months, driven by solid growth in the US economy, while the eurozone continues to struggle with weakness in Germany and France. This has led more investors to opt for U.S. bonds, exacerbating pressure on the ECB to lower rates.
Elsewhere, in Asia, bond inflows declined in September, with a net total of $4.99 billion, well down from $14.09 billion in the previous month. This slowdown reflects investor caution about possible Fed rate cuts and uncertainties related to the US elections. However, the inclusion of Asian bonds in global indices could revitalize inflows in the future as investors seek new opportunities in the region.
Looking at the performance of US, German and Eurozone 10-year bonds, we can note that the first two have followed relatively similar candlestick trajectories, while the Eurozone bond has experienced greater fluctuations and volatility. This has generated significant disparities, including relevant price gaps in mid-July. If we compare the US bond, which currently trades at 4.038%, with the German bond, which stands at 2.208%, we see that, although Germany is trying to keep pace with the US, Europe is not helping to boost German bond yields. In fact, the Eurozone bond appears to be moving steadily in the opposite direction to the other two. It will be interesting to see whether the German bond continues to replicate the performance of the U.S. bond or whether it starts to correlate with the U.S. bond.
In summary, central banks in Europe and the US are on divergent paths, which is reflected in the bond market, with the ECB facing difficult decisions and global investors readjusting their strategies depending on monetary policy and geopolitical uncertainties.
Ion Jauregui - ActivTrades Analyst
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INCOMING LOWER HIGHS!!When they bring the talking heads on TV and make them say: "we haven't seen anything yet, yields are going higher!", you know it's time to buy them!
Every single time they do this, bonds yields are either making higher highs or very close to those "local tops".
It was identical prior to October 7th of last year. Look it up as a reference.
If you don't like that relation, how about you look up Ray Dalio 'warning us, poor naive investors' to NOT BUY LONG TERM NOTES.
Yields going up is nothing but a big lie in my moronic opinion.
This is the next 'Lower high' and I think we're now heading with clean air down to 3.26% on the 10yr note.
Why the US 10-Year Yield Deserves Close AttentionThe 10-year US Treasury yield, at its highest since July, has mostly moved sideways this year. However, the weekly chart reveals a potential falling wedge pattern. If yields close above 4.53%, it could signal a push towards new highs. Initial resistance is at 4.18% (200-day moving average) and 4.24% (55-week moving average). Markets expect a 25-basis point Fed rate cut in November, but investors are watching key economic data, and Fed comments for further insights.
Keep this on your radar, because while the market holds above 3.50, this longer term potentially bullish pattern will remain valid.
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US 10Y TREASURY: driven by inflationThe inflation data were the ones that the market was watching closely during the previous week. The September inflation came just a bit higher from the market estimate. While core inflation remained elevated at 0,3% for the month and 3,3% for the year, the inflation figures were standing at 0,2% in September and 2,4% for the year. As inflation is holding modestly above Feds target of 2,0%, the markets are anticipating the next Feds move. Whether they will cut in November or maybe, the next cut will be postponed for December. This question came after the Atlanta Fed President Bostic noted in an interview that the higher inflation data might impact his opinion to skip a rate cut in November.
The US Treasury yields reacted accordingly during the previous week, where 10Y US yields were pushed to the levels above the key 4,0% level. The highest weekly yields reached were at 4,1%, however, they slipped modestly toward the 4,073% at Friday's trading session. As the market is digesting the latest inflation, it should be expected for yields to calm down a bit in the week ahead. The next target of markets might be to test levels below the 4,0%, where 3,9% or even 3,8% might be the next targets.