US 10-year yield at major crossroads
The TNX should be watched very closely next week as the daily chart currently indicates a high risk of seeing another bond rally in the wake of the latest US employment figures (which weren't all that bad). If doubts over a possible Fed rate hike towards the end of the year strengthen in September, the 10-year yield could fall back to it's historical lows, reached earlier this summer. This trade setup currently suggests that so long as the TNX trades sub 1.65%, bond prices are likely to rebound in September. The other scenario would consist in prices breaking support, perhaps in the wake of hawkish comments by FOMC participants, leading to a new period of rising rates similar to that which we saw in 2013 and 2015.
Note
Judging by yesterday's close (at 1.61), this market may attempt to break the resistance cited above sometime by early next week. Waiting to see what happens today (Friday, Sept. 9).
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