The debt securities market over the past few months has been in disfavor, imposed with redoubled force by the progressive cycle of interest rate hikes. However, this state of affairs has been somewhat disturbed, helped by macro data readings that point to an economic slowdown. Economic uncertainty, coupled with recent systemic risks, has put pressure on US 10-year yields, which yesterday fell to levels not seen since September 2022, and strengthened the position of bonds in the market. What will happen next? It all depends on the narrative of the Fed's bankers, who will have to decide whether to fight persistent inflation and raise interest rates once again, or whether, in light of emerging weak macroeconomic data from the economy, the cycle of increases should be halted after all. At this point, the key data that could decide what happens next are tomorrow's NFP reading and next week's CPI inflation report.
Looking at the chart of U.S. TNOTE quotes, we can see that these are currently in the resistance zone set by the abolition of the 23.6% Fibo of the downward impulse initiated in early March 2020. Moreover, this level is also the zone of the intersection of the 50-week exponential moving average, which in terms of technical analysis can be seen as a bull/bear market boundary zone.
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Source: xStation 5
