It’s now clear that there won’t be any stimulus deal before elections. President Donald Trump indicated, “after the election we’ll get the best stimulus package you’ve ever seen.” DOW and S&P 500 closed lower overnight while NASDAQ ended with small gain. Treasury yield also finally moved in tandem with risk sentiments this week. 10-year yield dropped -0.023 to 0.778 overnight, giving up 0.8 handle.
More downside is mildly in favor in TNX for the near term, as investors adjust their risk positions ahead of US elections. We’d anticipating further decline in stocks towards the end of the week, which should theoretically push bonds higher and yields lower. Still for TNX, downside should be contained by 55 day EMA (now at 0.719) unless there are very drastic developments.
