By Samir Al Khoury,
The US bond markets are experiencing sharp fluctuations amid economic uncertainty and ambiguity surrounding monetary and fiscal policy in the United States.
Yields on US Treasury bonds across various maturities have risen significantly for the third consecutive day. The two-year bond yield reached 4.028% today, up from 3.656% two days ago, which was its lowest level since April 5, 2023. The ten-year bond yield also increased to 3.935%, after hitting 3.667% two days ago, its lowest level since June 7, 2023.
Notably, the inversion in the yield curve between the two-year and ten-year bond yields has narrowed to minus 10 basis points, after previously reaching more negative levels. This narrowing raises the question once again: Will the US economy enter a recession or achieve a soft landing this year?
As for the US Dollar Index, which measures the dollar’s performance against a basket of six major currencies, it also rose, recording 103.36 points today, after dropping to 102.16 points two days ago, its lowest level since January 12, 2024.
The increases in both the Dollar Index and US Treasury yields are attributed to several factors, most notably the reduction in market expectations for interest rate cuts to 105 basis points in 2024, as well as the decreasing likelihood of an emergency cut before the Federal Reserve’s scheduled decision on September 18.
From a technical perspective, the momentum for the 10-year bond yield appears negative, as indicated by the Relative Strength Index, which is currently around 36 points. According to Fibonacci retracement levels, the 10-year bond yield is likely to rise to 4.077% (38.20%), 4.203% (50.00%), and 4.329% (61.80%).
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.
