US: Equities and 10-year yields flying high – BBH

The US 10-year bond yield is consolidating in a new and higher range of 2.40%-2.50%, points out Marc Chandler, Global Head of Currency Strategy at BBH. 

Key Quotes

“The March note futures contract is bouncing in a trough marked by 123-12 on the downside and around 124-00 on the upside.  The technical indicators are not generating robust signals at the moment, but given the risk that upcoming data show a tick down in CPI and slower retail sales growth, we suspect the risk is on the downside in yields (upside in price).”

“The S&P 500 gapped higher Wednesday and Thursday last week as the market advanced every session last week for a 2.6% gain. The NASDAQ rose 3.4%.  These are the best weekly performances in a little over a year. The S&P 500 had edged lower in the last week of 2017 (-0.35%), but before that the last week this benchmark fell was in the week ending November 17.   Obviously, at record highs, talk about resistance is spurious.  Technical indicators are stretched, but only the downside gaps and the Bollinger Band suggest a cautious stance.  The S&P 500 finished the last two sessions above the upper Bollinger Band (~2726).”