HALISTER1: U.K. 10-Year Yield Head-and-Shoulders Projects Pre-Brexit High

U.K. 10-Year Yield Head-and-Shoulders Projects Pre-Brexit High

(Bloomberg) -- Gilt 10-year yields completing three-month-long bottom formation, suggesting further bond weakness in on the cards, Bloomberg technical analyst Sejul Gokal writes.
  • Yield now at 1.00%; measured objective set at 1.36%, with interim Fibonacci projection at 1.20%; see live chart here
  • U.K. 10-year yield now at 100bps, compared with late Sept. trough of 64bps
  • Neckline of inverse head-and-shoulders, at 96bps, broken on Friday
  • Support at 120bps, which is 61.8% Fibonnaci pattern projection and Dec. yield downtrend; then at 136-140bps (pattern goal, pre-Brexit high on yield)
  • Sharp slump in sterling has boosted market expectations for U.K. inflation, affecting the long end of the curve the most
  • NOTE: Sejul Gokal is a technical strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice.
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