US 10yr Yields: Multi-decade downtrend over, protracted consolidation forming - Westpac

After signalling a sound base on the spike below 2.13%, momentum has now turned in favour of corrective pullbacks from the mid-range test of 2.38-40% for US 10yr Yields, according to Tim Riddell, Research Analyst at Westpac.

Key Quotes

“Although slippage is expected to continue, the initial pullback and the broader patterns suggest that the 2.22-2.25% area should provide sound support.”

“Weekly

• Weekly momentum has turned aggressively supportive after its recent steep slide into June. This turn suggests that a secondary squeeze is likely into August
• Yield pullbacks since Dec. were decidedly corrective and contained to standard retracement levels. This again suggests an eventual trend to higher yields”

“Monthly

• Monthly momentum is relatively mixed to neutral, but continues to suggest consolidation after a long term base rather than any material faltering
• Little change to the longer term bias of a multi-year downtrend having completed in 2016. However, a break higher is still awaited to confirm a change in trend”