US 10yr Yields: Multi-decade downtrend is possibly over - Westpac

Tim Riddell, Research Analyst at Westpac, explains that multi-decade downtrend is possibly over for US 10yr Yields and dips in yield allow for repositioning for higher yields in 2H’17.

Key Quotes

“Rebounds retraced to a relatively key 2.40-2.46% area, but a potential roll over in daily momentum suggests some interim consolidation/pullbacks.”

“The extent of interim corrections will determine whether range trading is to develop into 2H’17 or whether the underlying trend has resumed for a retest of 2.60-65%.”

“Weekly

• Moves since mid-Dec.’s high are decidedly corrective. Weekly momentum has potential to turn positive after an apparent base has formed below 2.20%.
• The uptrend may resume (towards 3.00-15%) but consolidation seems more likely. Limited pullbacks would allow yields to trade in the upper half of their recent range”

“Monthly

• Little has changed in the broad scenario for higher yields, despite a pause in rise of monthly momentum.
• The style of the squeeze from 1.38% suggests that a multi-year trend change has occurred. Logged yields are still hugging the previous down-trend”