dinsdag 4 april 2017

Trumpflation Hope "On The Brink" As Treasury Yields Hover At Key Support Levels

With the yield curve having already collapsed below pre-Trump-election levels, all eyes are on the 10Y Treasury yield and a crucial support level that was hit today that may divide hope from reality. It appears The Fed Hike "policy error" spoiled The Trumpflation hopes...


And, as Bloomberg reports, the benchmark 10-year Treasury yield fell Tuesday to as low as 2.31 percent, within a basis point of its 2017 low. In the process, it broke below its 100-day moving average by the most since September and breached a key Fibonacci retracement level for the past year. It’s looking like the peak yield levels from December and March may be a “textbook double top,” according to Ian Lyngen at BMO Capital Markets...


Goldman Sachs suggests the level to watch now is the Feb. 24th low at 2.308%. Anything below this pivot, even on an intraday basis, signals that a meaningful top was put in at the March high. It basically means that this cannot be waves i and ii of an incomplete v/5 but actually the initial stages of a corrective process. Assuming this is the case, that the market has in fact completed 5-waves, the correction should last around one third of the time it took to form 5-waves; in other words until around mid-June. As is always the case, corrections are messy and often difficult/overlapping. Ultimately looking for a three wave ABC process before continuing the underlying (up)trend. In terms of levels, the next big pivot below 2.32-2.305% is 38.2% retrace down at 2.127%...


Downside risks heighten below 2.308%. A break would open a period of corrective price action, which could last until mid-June. Next support 2.127%....