UST MORNING CALL: 10Y Yield Has Scope to 1.845%, ‘At a Minimum’
(Bloomberg) -- “Longer-term momentum studies are overbought (price basis) on the long-end of the curve and are starting to curl lower,” favoring “a deeper correction that should take the 10Y to 1.845%, at a minimum,” independent strategist Marty Mitchell says in note.
- “Another 5bp move higher on the 10Y yield will not be enough to get those momentum indicators to oversold, so a correction back to the 1.90%/1.92% area may be necessary”
- Other observations from strategist morning notes:
- BMO (Aaron Kohli): “Positioning had been looking increasingly short and setting up for a steeper curve,” which “left the rates space, in the near-term, at risk of a short-covering led rally”
- “As momentum measures start to turn out of overbought conditions, yields are testing resistance levels, and perhaps the positive data out of China is the catalyst that risk assets needed to push higher in a sustained way”
- CRT (David Ader): “Stochastics have reversed off of decidedly overbought levels and we’re now seeing fast-stochs back above 20 –- an indication the negative momentum may have run its course –- or at least be losing potency”
- “We’re not ready to concede the bearish correction is over, but rather suggest that as the more relevant data picks up we’ll look for fundamental justification to press the trade”
Alert:
HALISTER1Source: BFW (Bloomberg First Word)
People Aaron Kohli (Bank of Montreal)
David Ader (CRT Capital Group LLC)
Marty Mitchell (The Mitchell Market Report LLC)
To de-activate this alert, click
hereUUID: 7947283