By Samir Al Khoury,
US Treasury bond yields across various terms fell significantly, with the two-year bond yield reaching 4.411% two days ago, its lowest level since 7 February 2024. Similarly, the ten-year bond yield recorded 4.144% yesterday, its lowest level since 13 March 2024.
The two-year bond yield, which is highly sensitive to federal monetary policy, has experienced downward momentum due to several factors:
• Increased market bets on US interest rate cuts: The market is currently pricing in the possibility of three rate cuts this year.
• Dovish statements from Federal Reserve Chairman Jerome Powell: Powell has hinted that interest rates will begin to be reduced this year.
• Decline in US economic indicators: The headline consumer price index on an annual basis recorded 3.0%, lower than expectations (3.1%) and the previous reading (3.3%). Additionally, the core consumer price index, which excludes food and energy, slowed to 3.3% annually, below both expectations and the previous reading of 3.4%.
Next week, on Friday, 26 July 2024, analysts are closely watching the release of the core personal consumption expenditures (PCE) price index for June. This indicator, preferred by the US Federal Reserve, recorded 2.6% annually in May.
Any reading below expectations for the core PCE price index could negatively impact US bond yields, particularly the two-year bond yield.
From a technical perspective, momentum appears negative for the two-year bond yield. The Relative Strength Index (RSI) is currently around 28 points, indicating it is in the oversold zone.
According to Fibonacci retracement levels, the two-year bond yield is likely to fall to 4.320% (78.60% level) and 4.121% (100.00% level).
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice.
Taurex is the trading name of Zenfinex Global Limited, Stochastic Africa SL Ltd, Zenfinex Global LLC, and Zenfinex Limited.
Zenfinex Global Limited is registered in the Republic of Seychelles with registration number: 8428731-1 and is regulated by the Financial Services Authority of Seychelles (license number SD092). Its registered office address is F20, 1st Floor, Eden Plaza, Eden Island, Seychelles.
Stochastic Africa (SL) Limited is a company registered in Sierra Leone with Company Number: SL270319STOCH05271 and is licensed by the Bank of Sierra Leone under license number BSL/SAL/2023 and with the registered office at 148D Wilkinson Road, Freetown, Sierra Leone.
Zenfinex Global LLC is a company registered with the Financial Services Authority in Saint Vincent and the Grenadines under registered number 138 LLC 2019. Its registered office is Hinds Building, Kingstown, Saint Vincent, and the Grenadines.
Zenfinex Limited is a company registered in England and Wales under registered number: 11077380. Authorised and regulated by the Financial Conduct Authority under firm reference number 816055. Its registered office is 4th Floor, 4 Eastcheap, London, EC3M 1AE, United Kingdom.
*All trading involves risk.
