The 2 year yield moved higher on Friday and tested the underside of the 100 day MA (blue line in the chart above).
Today, the yield moved above that MA line and has extended higher. The low today came in at 4.325%. The 100 day MA is at 4.329%. The high reached 4.466%. The current yield is at 4.447%.
Getting and staying above the 100 day MA tilts the yield bias back to the upside for that part of the yield curve.
Although higher, the two year yield remains 44 basis points away from the high reach back in November at 4.88%.
Looking further out the yield curve, the 10 year yield dipped below its 200 day moving average last week on Thursday before surging back to the upside on Friday after the US jobs report.
The move to the upside continued today with the 10 year yield currently up 10 basis points at 3.627%. The yield tested the broken 38.2% retracement at 3.64% (see chart below) but found some slowing of the rise against that level.
The 10 year yield remains comfortably below the 100 day moving average currently at 3.738%. In contrast to the two yield which is within 44 basis points of its cycle high, the 10 year yield is currently 71 basis points from its high yield of 4.335 reached on October 21.
The market is still anticipating slower growth ahead, and low inflation. It would take a move above the 100 day moving average to give the upside more credence.
Both the two-year and 10 year yields are below the current target rate from the Fed at 4.75%. The Fed said in December that their target terminal rate was 5.10%. With the stronger jobs report on Friday market traders will be searching for clues on whether Fed officials anticipate a higher terminal rate.
Tomorrow Fed's Powell and Williams will both be speaking. Focus will be on that question.
