Ten-Year US Treasury Yield in Focus as Inflation Data Looms
Treasury Yields in the Crosshairs Ahead of High-Impact Inflation Data Due
Taking a quick look at a daily chart of ten-year US Treasury yields (
US10Y
) highlights a change in tone of the bond market over the last three trading sessions. The ten-year Treasury yield has climbed 14-basis points since Friday's swing low printed in the aftermath of a shockingly poor reading for headline nonfarm payrolls. After having a chance to digest April's NFP report, however, markets pegged the miss to labor shortages. After all, the NFP report showed a healthy uptick in average hourly earnings, and JOLTS data released this morning showed that US job openings are at their highest on record. This has helped reignite inflation fears and the debate around Fed tapering, which in turn, is weighing negatively on the bond market. Bond prices fall as yields rise, and vice versa.
That said, the sharp reversal in Treasury bond yields on Friday left behind what appears to be a bullish engulfing candlestick. Technicians may also consider how US10Y is now trading back above its 50-day simple moving average. This could open up the door to a test of technical resistance posed by the short-term descending trendline and upper Bollinger Band near 1.65%. Eclipsing this technical obstacle might bring fresh year-to-date highs into focus. Perhaps the upcoming release of monthly inflation data on Wednesday, 12 May at 12:30 GMT will provide a fundamental catalyst to spark the move. If inflation data crosses the wires below expectations, however, we could see a boost to demand for Treasuries that pushes yields back lower.
- Ten-year US Treasury yields have rallied 14-basis points since Friday's swing low
- Bonds are selling off again as investors grow weary of mounting price pressures
- US10Y could snap higher if monthly inflation data due for release tops estimates
Taking a quick look at a daily chart of ten-year US Treasury yields (
US10Y
) highlights a change in tone of the bond market over the last three trading sessions. The ten-year Treasury yield has climbed 14-basis points since Friday's swing low printed in the aftermath of a shockingly poor reading for headline nonfarm payrolls. After having a chance to digest April's NFP report, however, markets pegged the miss to labor shortages. After all, the NFP report showed a healthy uptick in average hourly earnings, and JOLTS data released this morning showed that US job openings are at their highest on record. This has helped reignite inflation fears and the debate around Fed tapering, which in turn, is weighing negatively on the bond market. Bond prices fall as yields rise, and vice versa. That said, the sharp reversal in Treasury bond yields on Friday left behind what appears to be a bullish engulfing candlestick. Technicians may also consider how US10Y is now trading back above its 50-day simple moving average. This could open up the door to a test of technical resistance posed by the short-term descending trendline and upper Bollinger Band near 1.65%. Eclipsing this technical obstacle might bring fresh year-to-date highs into focus. Perhaps the upcoming release of monthly inflation data on Wednesday, 12 May at 12:30 GMT will provide a fundamental catalyst to spark the move. If inflation data crosses the wires below expectations, however, we could see a boost to demand for Treasuries that pushes yields back lower.