LIVE MARKETS-Benchmark Treasury yield retreats; Support comes into view
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BENCHMARK TREASURY YIELD RETREATS; SUPPORT COMES INTO VIEW
The Treasury market staged a sharp reversal on Wednesday afternoon. After initially selling off in response to another hot inflation report, Treasuries rallied, leaving yields lower across most maturities by the close.
The move highlighted a growing debate on Wall Street. On one side is a steady stream of firm inflation data. On the other are recent comments from Federal Reserve officials suggesting the central bank is in no hurry to resume rate hikes despite persistent price pressures.
That debate appears to be tipping back toward bonds on Thursday. Despite hotter-than-expected producer price data, stronger-than-expected retail sales and in-line weekly jobless claims, Treasury yields are retreating. With Nasdaq 100 futures under pressure as the AI and technology trade unwinds, the benchmark 10-year yield is down more than 10 basis points on the day, recently near 5.06%.
From a technical standpoint, the reversal is notable. The 10-year yield reached 5.3293% on Wednesday, stopping just short of the recent 5.3645% peak. It has since fallen back inside the upper yearly Bollinger Band, currently around 5.10%-5.11%, suggesting upside momentum may be cooling.
Momentum indicators are also flashing warning signs. The weekly RSI has retreated sharply from a peak near 85, its most overbought reading since October 2022, and broken back below 70, signaling a loss of upside momentum.
Initial support sits in the 5.04%-5.02% zone. A break below that area would strengthen the case for a deeper pullback toward 4.92%. Beyond that, the rising 20-week moving average, now near 4.76%, remains a key longer-term level. The 10-year yield has not posted a weekly close below this measure since late February.
On the upside, the upper yearly Bollinger Band is once again the first hurdle. Above it, resistance comes in around 5.157%-5.177%.
A move above 5.3645% would suggest the broader advance is resuming. In that scenario, attention would shift to the 5.48%-5.52% area, followed by the 50-year moving average near 5.65%. Beyond that lies the 38.2% retracement of the 1981-2020 decline at 6.24%.
(Terence Gabriel)
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