Is this the top for the 10 year yield?
We have observed interesting price action in the 10-year yield, most noticeably the double top that has emerged within the 425-435bps range. On the heels of the Fed sticking to 75 basis points worth of cuts in the most recent interest rate projection, this could be the top in yields in 2024.
Key Developments:
Recent releases of Feb CPI and PPI were hotter than consensus estimates, which made many doubt the fact that the FOMC would stick to its guidance of three 25 basis point cuts in 2024. However, Fed Chair Powell and Committee members seemed to have a new tone, one that did not want to sacrifice the growth of the economy, even though some metrics of inflation show stickiness.
The markets were closed in observance of Good Friday, however, Core PCE and PCE (the Fed’s preferred inflation indicator) were still released. This number came in at 2.8% YoY in line with consensus estimates, however, the January release was revised higher from 2.8% to 2.9% YoY.
Overall, this was a decent inflation report, as consumer spending still showed strength, while personal income grew slightly less than expected. Recent Michigan Consumer Sentiment came in higher than expected, while one- and five-year inflation expectations came down slightly, reflecting consumers’ confidence in inflation returning to a more normalized target.
Technicals:
As the FOMC has stuck to 75 bps worth of cuts, it does seem that this would put a cap on short-term yields, as well as the 10-year. Provided inflation does not meaningfully reaccelerate, major overhead resistance will come in at 430 - 435bps. Should there be a break and close above this level, we could see the 10-year yield regain momentum, working its way up to 450bps.
Check out CME Group real-time data plans available on TradingView here: tradingview.com/cme/
Disclaimers:
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs tradingview.com/cme/
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
Key Developments:
Recent releases of Feb CPI and PPI were hotter than consensus estimates, which made many doubt the fact that the FOMC would stick to its guidance of three 25 basis point cuts in 2024. However, Fed Chair Powell and Committee members seemed to have a new tone, one that did not want to sacrifice the growth of the economy, even though some metrics of inflation show stickiness.
The markets were closed in observance of Good Friday, however, Core PCE and PCE (the Fed’s preferred inflation indicator) were still released. This number came in at 2.8% YoY in line with consensus estimates, however, the January release was revised higher from 2.8% to 2.9% YoY.
Overall, this was a decent inflation report, as consumer spending still showed strength, while personal income grew slightly less than expected. Recent Michigan Consumer Sentiment came in higher than expected, while one- and five-year inflation expectations came down slightly, reflecting consumers’ confidence in inflation returning to a more normalized target.
Technicals:
As the FOMC has stuck to 75 bps worth of cuts, it does seem that this would put a cap on short-term yields, as well as the 10-year. Provided inflation does not meaningfully reaccelerate, major overhead resistance will come in at 430 - 435bps. Should there be a break and close above this level, we could see the 10-year yield regain momentum, working its way up to 450bps.
Check out CME Group real-time data plans available on TradingView here: tradingview.com/cme/
Disclaimers:
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs tradingview.com/cme/
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
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