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2-Year And 10-Year Yields: A Closer Analysis

By Brian TwomeyBondsMar 08, 2021 06:21PM ET
2-Year And 10-Year Yields: A Closer Analysis
By Brian Twomey   |  Mar 08, 2021 06:21PM ET
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The US 2-Year Treasury

The 2-year Treasury yield at 0.147 currently trades directly under its next vital point at 0.1511. A break above and the range to the next average becomes 0.1511 to 0.9086 or 75 points. From 0.9086, next averages are located at 0.9162 and 0.9677.

Due to yield suppression at lower levels since February 2020, the 2-year traded 0.31 to 0.10 or 21 points. Short term yield averages located at the 10 year monthly average and above are descending and crossed below averages from 2 to the 9 year.

The current shape of the 2-year is a half circle due to extraordinarily high averages located in the middle portion of the overall formation. Those averages begin from 1.0560 to 1.50, however the averages are far from any resemblance to uniformity.

The overall shape of the curve rectifies and correctly slopes in an upward trendline if the 2-year trades above 0.9086, 0.9162 and 0.9677.

Since Feb. 18, the Fed lowered the Fed Funds rate to 0.07 from 0.08. Mar. 2 and 3, the 2-year yield traded to its lowest support at 0.11 and 0.12 then skyrocketed to 0.14 and 0.15 highs. The Fed offered the 2-year a free long trade as it traded to barely above the Fed Fund highs of the day at 0.08 and 0.10.

From the current 2-year at 0.149 to the present Fed Funds rate at 0.07, barely 7 basis points exist. If the Fed raises the Fed Funds rate to 0.08 then the 2-year breaks 0.1511 and trades not only much higher but in a wider trade range.

Middle averages are deeply oversold while 0.9086, 0.9162 and 0.9677 are oversold yet moderately. Any price lower for the 2-year then oversold begins to achieve oversold to a higher degree.

Lower supports begin at 0.1096, 0.111 and 0.1246. Next targets above 0.1511 are located at 0.1696, 0.1903, 0.2521, 0.3562, 0.4417, 0.4539, 0.5282 and 0.5918.

From January 2020 to March 2021, Fed Funds traded 0.04 to 0.07. Should the Fed Lower the Fed Funds rate from 0.07 to 0.06 or 0.05, then the 2-year offers another free trade as oversold then achieves its maximum.

10-Year Yield

The current 10-year Treasury yield at 1.606 sits comfortably between 1.3305 to 1.8448. Overall monthly averages from 1- to 10-year are uniform and slope upwards from 0.805 to 2.09.

A break of 1.3305, targets 0.805 while a break at 1.8445 targets next 1.9702, 1.9819, 1.9911 then 2.0411.

If it falls below 1.3305, then next targets along the way to 0.805 are located at 1.3077, 1.2270, 1.1730, 1.0356, 0.9592. Below 0.805 targets 0.7209 and 0.5740.

Above 1.8448 then next targets are found at 1.9075, 1.9238, 1.9319 and 1.9401.

The most vital points between 1.3305 and 1.8448 are located at 1.4659 and 1.5876.

On Mar. 2, the 10-year yield traded lows to 1.3910 and just ahead of supports at 1.3746, 1.3867 and 1.3636.

2-Year And 10-Year Yields: A Closer Analysis

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2-Year And 10-Year Yields: A Closer Analysis

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