Halister News

(Bloomberg) -- U.S. 10-year inflation breakeven rates are rising for a third week after holding the crucial 100-week MA support at 1.67%; while the bounce from support is encouraging, the notion of a bottom in ’inflation’ is still premature, Bloomberg Technical Analyst Sejul Gokal writes.

• Click here for LIVE chart
• U.S. 10y inflation breakeven rates have risen as much as 11bps since probing the critical support two weeks ago for the first time since last October
  • Medium-term momentum line (MACD, weekly) has also found support at its two-year up-trendline which aids the stabilization process in B/E’s
  • Below 100-WMA, next breakeven supports at 1.49% and 1.35%
• Market remains biased to fade revival in inflation expectations, so long as the mid-March downtrend and 55-DMA cap at 1.80%-1.82% (see chart) holds; above here neutralizes the outlook
• Only above ~1.90% area would warn at trend reversal and shift the narrative to bullish (i.e. higher inflation outlook)
• Investors have reduced their inflation expectations this year after little traction seen in Trump’s policy agenda and as concerns grow that Fed’s current aggressive rate path may lead to ‘policy error’

• NOTE: Sejul Gokal is a FICC technical strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice.