Near-term Bearish Bond Yield Outlook
by Erik McCurdy
The following technical and cycle analyses provide short-term forecasts for the 10-year Treasury note yield. For intermediate-term outlooks see the latest intermediate-term forecast and for long-term outlooks see the latest long-term forecast.
Yields closed sharply lower Tuesday (16 December 2014), returning to previous lows of the downtrend from April. Technical indicators are extremely bearish overall, strongly favoring a continuation of the decline.
We are 7 sessions into the decline phase of the cycle following the short-term cycle high (STCH) on December 5. An extended decline phase that moves below the alpha low (AL) in October near 1.87% would reconfirm the current bearish translation and favor additional short-term weakness. Alternatively, a quick rebound followed by an extended rally phase that moves well above the STCH in November near 2.41% would signal the likely transition to a bullish translation. The window during which the next STCH is likely to occur is from December 29 to January 19, with our best estimate being in the January 5 to January 9 range.
- Last STCH: December 5, 2014
- Cycle Duration: 7 sessions
- Cycle Translation: Bearish
- Next STCH Window: December 29 to January 19; best estimate in the January 5 to January 9 range.
- Setup Status: No active setups.
- Trigger Status: No pending triggers.
- Signal Status: No active signals.
- Stop Level: None active.
Short-term Outlook
- Bullish Scenario: A rebound and close above congestion resistance in the 2.30% area would predict a move up to congestion resistance at the 2.45% level.
- Bearish Scenario: A close below the recent low near 2.05% would reconfirm the downtrend from April and forecast additional losses.
The bearish scenario is highly likely (>80% probable).
Editor's note: The bearish outlook is for interest rates (bond yields) which is bullish for bond prices.
No content is to be construed as investment advise and all content is provided for informational purposes only. The reader is solely responsible for determining whether any investment, security ...
more