Sunday, December 27, 2009

US Treasury Yield confirmed Breakout - Target at 200-Week MA.

Now we have a clear confirmation of that breakout and actually last week's candles both in Yield and UST 10-Yr Note price made meaningful Gaps and closed beyond long term trendlines that gives further credibility to the unfolding trends.

10-Yr UST Yield actually opened above both the long term trendline Resistance and the 2 recent consolidation Highs at around 3.60. RSI and ADX both look for continuation of the breakout and ADX actually is looking to turn up which means acceleration of the trend.

Targets and Ressitance clusters are at the 200-Week MA (4.08) and the Dec'07 & June'08 Highs around 4.30.
10-Yr UST Note slipped through the LT trendline Support and the recent Lows around 117. Unwinding of the long Treasury positions will see gradual layers of support first at June-Aug'09 lows around 114 > then the 200-Week MA (113.22) and finally the Oct'09 Low at 111.

Fundamentally the selloff in bond market is logical as we see gradual improvement in jobless and industrial production data. Positioning for coming inflationary forces and the steepening of the Yield curve add more fire to the unfolding trends in the present environment.

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