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U.S. equity index futures rise slightly: Nasdaq 100 up
~0.4%
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Euro STOXX 600 index ~flat
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Dollar, gold slip; crude down >1%; bitcoin up
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U.S. 10-Year Treasury yield falls to ~3.91%
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U.S. 10-YEAR TREASURY YIELD: SPIKE AND REVERSAL (0900 EST/1400 GMT) The U.S. 10-Year Treasury yield spiked to a multi-month high last Thursday. However, by Friday, it was back down, testing swing support. Now early in the new week, which includes event risks such as Fed Chair Powell's congressional testimony on Tuesday and Wednesday, and Friday's February non-farm payroll report, the yield is nudging below the lower-end of the support band:
Amid concerns that the Federal Reserve will need to continue to raise rates and keep those rates higher for longer, the 10-year yield jumped to a high of 4.0930% last Thursday. However, it reversed sharply by Friday, ending the week at 3.9630%. Despite the reversal, the yield did eke out a sixth-straight weekly rise. However, on Monday, the yield has now declined further to around 3.91%. With the reversal, the yield has fallen back below the 23.6% Fibonacci retracement of its 1981-2020 yield bear market at 3.9765%. Additionally, the yield is now back below a weekly Gann Line at around 3.96%. Thus, the six-week win streak is in jeopardy. Of note, since the yield's March 2020 record-low, once concluded, pronounced weekly winning streaks have marked some significant highs. This was the case with an eight-week win streak which ended on March 19, 2021, a seven-week run of gains that ended on Oct. 8, 2021, and a 12-week win streak that ended on Oct. 21, 2022. As long as the yield holds below 3.9630%, pressure may mount for a deeper retreat to 3.70%, then the 3.55%-3.40% area as a number of weekly Gann Lines are providing yield support in this zone. The yield's mid-January trough was at 3.3210%. Another thrust above 3.98%, however, can instead put traders on guard for the yield to challenge the 4.27%-4.3380% area. This zone includes another weekly Gann Line as well as the October 2022 high.
4.3380% was the highest level since November 2007, and it protects against the potential for a further rise to the 5%+ area.
(Terence Gabriel)
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(Terence Gabriel is a Reuters market analyst. The views
expressed are his own)
