According to Quek Ser Leang of UOB Group’s Global Economics & Markets Research, the major US 10-year note yield is facing firm support near 1.30 percent.
“From a low of roughly 1.000 percent in late January, the US 10-year yield conducted a powerful and impulsive rise that propelled it to a high of 1.776 percent in April. The drop from the top was unsurprising given the overbought conditions. While the pullback is considered a correction, it has now gained traction, as it fell dramatically by 7.9 basis points yesterday (06 July), its greatest one-day drop since late February. Despite the significant dip, there is a probability that the yield will return to its April high of 1.776 percent in the coming months. However, a break of the crucial (and very strong) support near 1.300 percent (55-week exponential moving average, rising trend-line from August, and minor trend-line on the daily chart) would signal that 1.776 percent is a more substantial peak than is currently projected. To put it another way, a break of 1.300 percent indicates that 1.776 percent is unlikely to return in the following two to three months “ossibly for a longer time.”
“Unless it can move back over 1.510 percent in the coming weeks, the 10-year yield is projected to trade under pressure. 1.630 percent is the next big resistance level above 1.510 percent. A break of 1.630 percent would considerably raise the chances of the yield returning to its previous level “”1.776 percent,” says the author./n
