Yields Rising Quickly
US yields are surging higher once again this week on the back of a recent string of better-than-forecast US data which has thrown the ‘Fed pivot’ narrative into turmoil. With jobs data coming in well above forecasts, inflation jumping again last month and retail sales bouncing back to their highest level in over a year, the market has flipped back in favour of expecting the Fed to push ahead with tightening deeper into the year or to increase the pace of tightening once again. Pricing for a larger hike in March has popped back up to around the 20% mark.
FOMC Minutes Next Week
Next week, the focus will be on the FOMC minutes. Given that the Fed was seen signalling a willingness to stick with hikes and in light of the hawkish commentary we’ve heard from several Fed members since then, the minutes are likely to add to the narrative. In light of this, the outlook for yields has plenty of upside risk into next week suggesting room for a move back up to 2022 highs.
Technical Views
US10y Yields
The rally off the 3.452% lows has seen yields breaking out above the bear channel from last year’s highs. The market is now testing the 3.891% level highs. This is a key area and a break above here will be firmly bullish putting the focus on a test of the 2.248% level next and the 2022 highs. To the downside, any correction lower here will see support at 3.452% come back into view.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.