US treasury yields jumped sharply overnight after Fed Chair Jerome Powell announced that adoption of “average inflation targeting”. That goes beyond the “symmetric” targeting, and allows inflation to overshoot to average out at 2% over time. While there was some initial jitters after Powell noted the overshoot would be “moderate”, traders eventually made up their mind in pushing yields higher.
10-year yield rose 0.059 to close at 0.746, resuming the rebound form 0.504. The notable support from 55 day EMA is a positive development for TNX. It should now be on track to take on June’s resistance at 0.957. Technically, firm break there would confirm completion of the whole consolidation pattern from 1.266. But we do not envisage this for the near term.
Similarly, 30-year yield closed up 0.094 at 1.500. Rebound from 1.165 has resumed after drawing support form 55 day EMA. Further rise should be seen to 1.761 resistance next. Firm break there will confirm completion of the consolidation pattern from 1.940.
