LIVE MARKETS-Benchmark Treasury yield still has its head in the Cloud

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BENCHMARK TREASURY YIELD STILL HAS ITS HEAD IN THE CLOUD

U.S. Treasury yields fell on Tuesday as traders bet that Federal Reserve Chair Jerome Powell will adopt a relatively dovish tone when he speaks at the conclusion of the U.S. central bank's two-day policy meeting on Wednesday.

Strong demand for an auction of 20-year bonds had helped send yields to session lows on Tuesday while falling stocks also reignited safe-haven demand for U.S. government debt.

Of note, since peaking at 4.809% in mid-January, the U.S. 10-Year Treasury yield US10YT=RR has now fallen around 50 basis points. It ended Tuesday at 4.281%, and it now stands around 4.28%.

With this, Bollinger Band width readings, a measure of historical volatility, are either falling, or remain moribund, across short and longer-term time frames.

In fact, on a monthly basis, this measure is now at its tightest level since December 2007. Thus, the yield can be seen as especially ripe for much more spirited action, or indeed, its next major trend.

Meanwhile, in late February, the yield descended back inside the weekly Ichimoku Cloud. Since then, it has essentially been trapped within its confines:

The lower boundary of the Cloud, which is now around 4.03%, contained the early March dip to 4.106%, while the upper boundary, which now resides around 4.32%, has not been cleanly surpassed on a weekly closing basis.

Thus, ending a week below the weekly Cloud, can put the lower monthly Bollinger Band, which is now around 3.72%, as well as the September 2024 low at 3.599%, and the April 2023 trough at 3.253% back on the table.

Closing out a week above the weekly Cloud, along with a thrust above the early February trough, at 4.40%, would suggest the yield is going to make another attempt to climb to and above the upper monthly Bollinger Band, which is now around 4.85%, and the 5.021% October 2023 high.

(Terence Gabriel)

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