Benchmark Treasury yield's head still above the cloud
U.S. equity index futures red: Nasdaq 100 off ~0.5%
Euro STOXX 600 index down ~0.8%
Dollar ~flat; gold, bitcoin dip; crude up ~1%
U.S. 10-Year Treasury yield falls to ~4.43%
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BENCHMARK TREASURY YIELD'S HEAD STILL ABOVE THE CLOUD
The U.S. 10-year Treasury yield US10YT=RR is trapped in a choppy range. That said, with comments from Federal Reserve Chair Powell expected later today and June payroll data due this Friday, traders are watching some key levels for signs of a breakout.
The yield put in an intraday high on April 25 at 4.739%. This high was right inside the maximum Fibonacci retracement zone of the October-December decline in the 4.7288%-4.7561% area.
With its June 14 intraday low at 4.188%, the yield bottomed just above the lower boundary of the weekly Ichimoku Cloud which has proven to be significant support for quite some time:
Ichimoku Cloud is a technical indicator which displays support and resistance, identifies trends, and measures momentum. Utilizing midpoints of ranges, a number of lines are generated. Two of these lines are used to create Cloud boundaries. The entire cloud is shifted forward in time in order to provide a glimpse of future support and resistance.
Since closing above the Cloud on a weekly basis in early February 2021, the yield has not ended a week back below it. Dips back down to test the Cloud have proven to be relatively short-lived leading to rallies.
Therefore, a weekly close below the Cloud's lower edge, which now resides around 4.14%, would suggest the potential for a sea change in the yield's trend, leading to a much deeper decline.
Meanwhile, in the wake of last week's Presidential debate, the outcome of which may be stoking concerns about the potential for rising budget deficits, the yield has now popped back up to around 4.43%.
The 61.8% Fibonacci retracement of the October-December decline is a hurdle at 4.534%.
The May 29 high at 4.638% and a resistance line from the October high, now around 4.6425%, present another barrier.
A yield close above 4.7561% can suggest an upside breakout that can see the yield challenge, and likely exceed, the 5.021% October 2023 peak.
(Terence Gabriel)
*****
FOR TUESDAY'S EARLIER LIVE MARKETS POSTS:
EUROPE'S INSURERS WEAK AS ATLANTIC HURRICANE SEASON KICKS OFF - CLICK HERE
Q2 U.S. EARNINGS GROWTH TO RISE 'INTO THE TEENS' - DB - CLICK HERE
INVESTOR POSITIONING IN EUROPE TURNS BEARISH - CLICK HERE
RBC GINGERLY LIFTS S&P 500 YEAR-END TARGET TO 5700 - CLICK HERE
THE PRICE IS RIGHT - CLICK HERE
CAGEY START FOR EUROPE - CLICK HERE
EUROPEAN EQUITY FUTURES RED - CLICK HERE
DECISION DAY FOR FAR RIGHT'S RIVALS - CLICK HERE
10yy07022024 https://tmsnrt.rs/3zsa67c
(Terence Gabriel is a Reuters market analyst. The views expressed are his own)
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