Switch to higher returns
The US 10-year yield climbed last week to the highest level since February 2020 at 1.6085%. The yield corrected them lower to retest the 38.2% of the move higher from the Jan. 28 low of 1.3738% (the low yield hit 1.3776% and rebounded). It was the key. The lower fix was just a regular vanilla variety.
After edging up to 1.4580%, a move to retest the 200 hour MA (green line) saw yield bounce off the key MA line yesterday. The combination of the rebound to 38.2% and then the rise in the 200 hour MA gives more credence to the higher returns argument.
In trading today, the yield has returned above the 100 hour MA at 1.4410% and sees some upward momentum (taking the level above Monday’s high). Today’s high reached 1.4956% just ahead of the 1.50% level. The current level is at 1.480%. up 8.8 basis points on the day.
It will take a return below the 100 hour MA at 1.4410% to ruin the higher yield bias. If that doesn’t happen, a rise above the 1.500% level will open the door for a retest of last week’s high of 1.6085%.