LIVE MARKETS-Benchmark Treasury yield: Still stuck in the weeds

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BENCHMARK TREASURY YIELD: STILL STUCK IN THE WEEDS

U.S. Treasury yields edged lower on Thursday after comments from the top Treasury official eased concerns of any looming increase in the size of longer-dated debt auctions.

Treasury Secretary Scott Bessent said a near-term change is not planned given hurdles, including the Federal Reserve’s quantitative tightening program, Bloomberg News reported on Thursday.

Since its mid-January 4.809% intraday high, the U.S. 10-Year Treasury yield US10YT=RR has been on the back foot. That said, if the yield, which is now around 4.50%, can post a Friday finish above 4.476%, it will end a three-week losing streak:

In any event, there are a number of support levels that may make a more sustained decline a struggle.

The lower boundary of the daily Ichimoku Cloud is now at 4.465%, the February 5th low was at 4.40%, and the upper boundary of the weekly Ichimoku Cloud is around 4.34%.

Two Fibonacci-based moving averages, the 21- and 89- week moving averages (WMA), are now around 4.40% and 4.25%. Of note, the 89-WMA supported the yield at the tail-end of its pullback into early-to-mid-December.

The lower boundary of the weekly Ichimoku Cloud is now around 4.14% and the December 6th low was 4.126%.

Therefore, the yield may attempt to resume its climb, or see further choppy range trade, as it flirts with, or tests, these levels. A weekly close below the lower weekly Cloud boundary, however, can suggest potential for a much deeper decline, which can put the September 2024 and April 2023 lows, at 3.599% and 3.253%, back on the table.

On strength, a thrust above resistance at the February 12 and January 23 highs, in the 4.66%-4.664% area, can suggest the yield is back on track to attack the 4.809% January 2025 high. The October 2023 high was at 5.021%.

Meanwhile, traders continue to eye the weekly Relative Strength Index (RSI). Since breaking down in October 2023, this oscillator, which now resides around 55, has failed to muster enough strength to reclaim overbought territory (>70). This underscores the significance of the October 2023 peak, and suggests that further down drafts may still be in the cards.

(Terence Gabriel)

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