SAMT Blog
US 10Treasury Yield: About to Give Signal for Sharp Rise ?
30. August 2021, by Bruno Estier
Technical Analysis
In April 2021, we reviewed the US 30-year Treasury yield. Now we present the US 10-year Treasury yield that is about to give a technical analysis signal of a sharp rise by rising back above its rising 40-week moving average (1.35%) and by breaking the short-term descending trend line from the 1.7% area in April to 1.35% right now.
Indeed, in July and August, the pullback in Treasury yields from April to August has left two spikes near 1.12% and should find support near 1.25% thanks to the rising Ichimoku Cloud in the coming months. Because of the potential strong upward momentum, which should develop as shown by the weekly stochastic rising above 50% and by the crossing up of the MACD, which will also turn positive again, it is likely that once above the Fibonacci of 38% (1.37%), the yield will rise first to 1.52% (Fibo 62%) and then to its former high of 1.76% and extend later toward the 2.16-2.54 area.
Going through 1.76% may also activate a medium-term inverted Head & Shoulder pattern, with a left Shoulder in August 2019 and a Head in March 2020. This classic reversal pattern would fit the perception that the US 10-year yield has reached a secular low in March 2020, and it should target a level of 3.9%, which looks unthinkable at the current time!
Looking at the top panel, the ETF KBE of US banks seems to correlate well with the previous rise from August 2020 to April 2021. And this asset class could, given the projection of the Head & Shoulders on the 10-year yield, become a great safe haven for bondholders in the coming months!
About the author
Bruno Estier is an Independent Market Strategist and founder of Bruno Estier Strategic Technicals (bruno.estier.net). Based in Geneva, he is a global market advisor and technical analyst coach for professional traders and portfolio managers.
He is a past president of the Swiss Association of Market Technicians (SAMT) and served on the board of directors as chairman and secretary of the International Federation of Technical Analysts (IFTA). Bruno holds a MSTA from The Society of Technical Analysis (STA) in London and the CFTe and MFTA designation from IFTA.
He worked for 12 years as a technical analyst with JP Morgan in Zürich and Paris and 10 years with Lombard Odier & Cie in Geneva. He earned an MBA from The University of Chicago Graduate School of Business and a Masters in Economics from the University of Saint Gallen (HSG).
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