IF we see a weekly close on the US 2-year yield above 4.09-4.13%
This area between the upper bound range of 4.40% to 4.42% and the lower bound range of 4.09% to 4.13% on the 2-year yield has been pivotal over the last 10 months.
Dec 2023: Weekly close below the upper range sees us hit the lower support range 3 weeks later
Mar 2024: Hold of upper support range on re-test leads to a sharp multi week move higher.
July 2024: Weekly close below the upper range sees lower range tested (and broken) the following week.
Late July/early August 2024: Weekly close below the lower range. Re-test 2 weeks later holds and yields fall to the trend low in September
Oct 2024: We held on the first test 2 weeks ago and are now testing again. A weekly close above, IF seen, would suggest (hard though it is to believe at this point) that we could rapidly revisit the upper range at 4.40-4.42%...and possibly quite quickly
I would not pre-empt this break but equally, if seen...I would not ignore it and suggest that for Fixed income bulls such a development should make you very afraid and likely signal at least the perception of a Fed shifting away from the present rate path and maybe even the reality of them not moving in November.
