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According to Tim Riddell, Research Analyst at Westpac, a more dynamic rally has developed off 2.71% support for US 10yr Yields and the uptrend looks set to continue towards measured targets in the 3.15%-3.175% area.

Key Quotes

“Daily indicators are beginning to lag the gains in yield and though not turning (yet), the potential of divergence suggests that a period of consolidation might develop.”

Weekly

  • A tight uptrend (off 2.025%) is firmly in place and raises potential for a measured move towards 3.325%-3.35%. Dips are critical and ought to hold above 3.00%
  • Weekly indicators are also starting to lag the uptrend, but they remain supportive. The risk of divergence is clear though, highlighting potential for retracements”

“Monthly

  • Despite being at levels perceived to be overbought levels, monthly momentum indicators are still pushing higher which suggests an extending uptrend
  • A long term base formed in 2016. Multi-decade down-channels are now being breached, opening potential for a pronounced, long term trend of rising yields”