US 10-year yield accelerated higher overnight and breached 1.3% for the first time in a year, before closing at 1.299, up 0.099. Reflation trade over the massive US stimulus package, together with loose Fed policy was a factor in driving funds out of treasuries. Also, there is increasing optimism of returning to normal with the pace of vaccine rollout, domestically and globally.
TNX’s solid break of 1.266 resistance is an important bullish development. Upside momentum is also accelerating with the medium term channel resistance taken out, with a gap up. The strong support from 55 week EMA is also a medium term bullish sign.
Now, further rally is expected as long as 1.131 support holds. We’re tentatively looking at key resistance zone between 1.429 and 38.2% retracement of 3.248 to 0.398 at 1.4867 at next target.
