Are we there yet?
What does there mean?
Well in terms of targets, I have banged the drum about the pivotal nature of the 109-01 to 109-02 levels on the TY1 chart and we effectively got there today with the low of 109-04
In that respect it is also worth visiting the 10-year yield chart which is not surprisingly also banging against what is either a "glass ceiling to be broken" or a "brick wall"
Which is it ??
I do not honestly know at this point.
There are so many moving parts at the moment in particular with politics now to the fore, so it is a good time to be cautious
When you look at the chart below it is clear that this area at 4.47% to 4.49% is also pivotal
In April we hit a high of 4.735% when the 76.4% pullback stood at 4.727%
Today we hit a high of 4.48% with the 76.4% pullback at 4.467%
In addition, we have good horizontal resistance at 4.48%
On the weekly chart the stochastic is at levels that in 2023 have been followed by decent (July 2023) or major (Oct 2023 and April 2024) pullbacks
It is too early to say if this is a glass ceiling or a brick wall but not too early to say that it is probably prudent to step away now from the short-Fixed income trade. If these levels give way then you can reload with increased conviction.
It is mid-November- a much better time of year to take "opportunity loss" than realised loss.
What about the other side? What about signs that a high is in fact in and that yields are set to move lower again?
My level on that is 4.26%.
If we pushed below that level, we would have a clear double top that would suggest back to 4.04% again. That is clearly some way off at this point but worth bearing in mind.
Having been unequivocally bearish for some weeks I would not take a more cautious / considered approach until circumstances and levels become clearer
