Ten-year Treasury yields will close the week near 1.50% — the lowest weekly close in 6 weeks — but Treasury traders are showing minimal appetite for lower yields.
On Wednesday, the extreme demand at a $21B 10-year auction was quickly wiped out without seriously challenging the June 1 low. Today, the market crept lower again but was beaten back to 1.50%. A test of resistance at the 55-day moving avg at 1.67% or the June high of 1.73% may be in order.
Another indicator that bonds are about to slump is this week’s Barron’s cover.
USD/JPY has similarly attempted to break 79.00 several times this week and failed. The correlation hasn’t been excellent lately but a rebound in T-note yields would like push the pair above 80.00 and signal a better tone in risk assets.
