The Treasury 10Y Yield chart on a monthly skew provides technical hints of how the yield trajectory could develop going forward. The 10Y Yield trendline has drifted above the Tenkan, although the Tenkan line hasn’t generated the uptrend signal with the cross above the Kijun line. Indeed the 10Y Yield trendline has drifted above the 20 months m.a. 1.15% yield, while also drifting above the Kijun Line 1.5% Yield. The RSI oscillator signal relative strength in the uptrend.
Given all the technicals within the chart and the intraday Yield of 1.646%, becomes possible to elaborate that the 10Y Yield would require testing the 50 months m.a. and 100 months m.a. resistance technical levels, therefore having the 10Y Treasury to test the 2.0% Yield level. The 36 basis points increase in the 10Y Yield up to 2.0% would be likely to spark Treasuries buying interest between financial institutions and funds, which would support a decrease of the 10Y Yield down to 1.41%, in fact, that could establish a range between 1.95%<1.41% range, that going forward could be challenged, with an inverse head&shoulder pattern, seeing the 10Y Yield trendline drifting to 3.15%, from where a consistent above-average Yield curve could be observed.
Variance in the Treasuries Yield curve term structure has been determined in part by rising inflation expectations, meanwhile, investors have been largely dispensed by changes of the Federal Fund rate, either by alternative assumptions about what can be considered as an adverse term structure twist. In so far, rising Treasuries Yield curve, especially in the longer maturities duration, would have been determined by changes in the portfolio’s holdings of off-the-run Treasuries held by financial institutions and sovereign funds. The build-up of Debt Obligations portfolios according to diversification and immunization strategy, would have to take into account the immunization risk that the interest rate term structure could have to be changed earlier than anticipated, considering rising liquidity premia, hence rising yield curves.