Selloff in US treasuries was again the major theme in the markets overnight. Both 10- and 30-year yield jumped sharply and closed at the highest level since the pandemic. Fed was clear that it’s not going to tweak its asset purchases for now, and gave a nod to the rise in yields. Investors were betting on improving outlook and the return of inflation through this year’s transitory spike.
The upside re-acceleration in 10-year yield suggests that it will likely have a take on resistance zone around 2% level, between 1.971 and 61.8% retracement of 3.248 to 0.398 at 2.159 , before forming a top. This will remain the favored case as long as TNX stays above 1.578 support.
30-year yield is ahead of 10-year yield in the development. TYX has taken out corresponding resistance zone with yesterday’s rise. That is, 2.443 resistance and 61.8% retracement of 3.455 to 0.837 at 2.455. We might further rise in TYX if it could sustain above the current this resistance zone. Though, long term channel resistance at around 3% should cap upside.