This is an excerpt from a piece written by Steve Feiss of Government Perspectives. The excerpt summarized dealer views on the break of resistance on the 10 year note at 2.28/2.30 and what that signals for the near term course of interest rates. If you have Twitter you can follow Steve Feiss @stevefeiss.
Via Steve Feiss at Government Perspectives:
Ø CitiFX Weekly RoundUp: Sacre Bleur. To parity and beyond? … and on US RATES (“flip a coin”), “The 2.30% area we have been highlighting on US 10s is now coming under pressure. Our medium to long term bias of higher US yields remains unchanged; however, the question is whether the base is in from which we will move higher or whether a broader decline (position flush out) will first be seen before higher levels later in the year. Unfortunately, for the time being, the answer to that question remains elusive and we would like to see further developments to take a view one way or the other. A weekly close below 2.30% on US 10s would be the first sign that lower levels are likely in the short-term. Further confirmation comes if yields across the curve also take out key supports (e.g., below 1.80% on US 5s and below 2.90% on US 30s). It is worth waiting for such a development to materialize, though, before expecting the next move in US yields to be lower.”
Ø CSFB: from SHORT to stopped OUT and buyer of dips (both 10s AND 30s). Chart of day – 10y yields, “have broken key resistance at 2.31/29%, which sets a yield top. We look for a move to the 38.2% retracement of the 2016 yield rise at 2.18/14% next, potentially 2.01/1.98%.” And on 30s, “have broken key resistance at 2.90%, which establishes a yield top to target 2.78/77%.”
Ø GS (on 10s, and BEs): “U.S. 10-year yields have broken 2.308-2.29% support. The area has been in focus for some time now, as the place to watch for signs of a base. Having now broken clear through it, chances are even greater that the market really has put in 5-waves at the March high. This allows room for a protracted corrective period, one which could last another 2-3 months, into June/July. In terms of next support, there’s a minor gap up from Nov. ’16 that comes in at 2.166-2.15%. The next level thereafter is 2.135% (38.2% retrace of the initial advance from July). View: Initially see support at 2.166-2.15%. Thereafter 2.135%. Likely messy/overlapping for another 2-3 months.”