LIVE MARKETS-Amid elevated volatility, benchmark Treasury yield vaults

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AMID ELEVATED VOLATILITY, BENCHMARK TREASURY YIELD VAULTS

The U.S. Treasury yield curve reached its steepest level since February 2022 on Tuesday as longer-dated yields jumped on supply concerns, with some holders of the debt also seen as likely being forced to sell due to recent market volatility.

The intensifying U.S.-China trade war also raised concerns about slowing growth, which sent shorter-dated yields lower on the day.

The U.S. 10-year Treasury yield US10YT=RR ended Tuesday at 4.26%.

Now on Wednesday, after China announced more levies on U.S. goods, retaliating against President Donald Trump's reciprocal tariffs that took effect earlier in the day, and the bond market volatility index .MOVE reaching its highest level since October 2023, the yield spiked to 4.5150%, putting it up 65.5 bps just from last Friday's intraday low at 3.86%.

The yield has since pulled back slightly to around 4.45%.

Of note, the MOVE Index is on track to rise for an eighth day in a row. It last rose eight-straight days in November 2016. Using Refinitiv data back to late 2002, this index's longest daily streak of higher closes was a nine-day run that ended in January 2006.

Elevated volatility may be impacting the significance of support and resistance levels. The yield has recently traded outside the weekly Ichimoku Cloud, which resides in the 4.01%-4.31% area, without sustaining those breakouts.

Nevertheless, as stands, with the yield's current rise, the focus has shifted back to some significant barriers in the 4.78%-4.85% area, including the resistance line from the October 2023 high, the January 2025 high, and the upper monthly Bollinger Band. The October 2023 high was at 5.021%:

A quick reversal back below the 4.31%-4.29% area, which includes the upper weekly Cloud boundary, and the 144-day moving average, the yield may then continue to range trade, with the early March low at 4.106%, and the lower weekly Cloud boundary, at 4.01%, at risk again.

Last week's low was at 3.86%, and the support line from the April 2023 trough is now around 3.74%.

(Terence Gabriel)

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