USD Index must overcome 106.79 to banish concerns that a deeper drop lurks around the corner – SocGen

A quieter 24 hours in fixed income saw 10-year UST yields settle around 4.84%. Economists at Société Générale analyze bonds and FX market outlook. 

A range of 4.70%-5.05% for 10-year UST yields should hold

Yields around 5% present good value no doubt for the horde of investors with long-term horizons and hold-to-maturity strategies, but it’s different for those with shorter or tactical considerations. 

Barring another flurry of flow-driven activity, we suspect a range of 4.70%-5.05% for UST 10s should hold until the next employment report drops on 3 November and the Treasury holds its final refunding window of the year. 

In FX, the Dollar bounced back from the 105.36 intra-day low on Tuesday, but it must ideally overcome 106.79 to banish concerns that a deeper drop lurks around the corner.