The bond market is a key spot to watch to start the new week

10-year Treasury yields are down at the lows by nearly 5 bps, falling to 1.248%, as the bond market points to more sour risk sentiment ahead of European trading today.


Things started off with a weak Univ. of Michigan consumer sentiment reading before things continued with some softer numbers from China today. All of that plays into delta variant concerns and dampens recovery hopes overall.

From a technical perspective, it has been a massive setback for bond sellers. Yields looked like they were poised to extend an upside move, building on the double-bottom near 1.13% but all of that has fizzled completely now.

A look at the 10-year yields chart shows that we are back under the 200-day moving average (purple line) and that will whet bond buyers appetite as safety bets reemerge.

There's room to roam to the downside for yields with the double-bottom near 1.13% providing a bit of a base, so we may be treading water between that and 1.30% going into the much anticipated Jackson Hole symposium at the end of the month.