The US 10 year yield moved lower this week, helped by flow of funds out of the longer end as the yield curve between 2-10 year moved negative on expectations the Fed would be forced to tighten hard to halt inflation.
Looking at the hourly chart, the high yield for the week reached 3.10% on Monday after closing last week at 3.084%. The lows for the yield came in near 2.9% where there were three separate lows from July 12 twice, July 13 twice and again today (see red numbered circles). That level will be a key barometer for traders. Stay above, and there the yield can move back to the upside. Move below, and there should be more downside momentum.
The current yield is at 2.93% which is down from last week closing level at 3.084% (down -15.4 basis points on the week).
On the topside, the 200 and 100 hour MAs at 2.949% and 2.959% would be the next upside target. A downward sloping trend line at 2.97% would be another level to get to and through for more upside momentum..
Taking a look at the 2 year yield this week below, it is telling a different story. Last Friday, the yield closed the week at 3.11%. The low for the week was on Tuesday at 2.981%. The high was at 3.269% on Thursday. The current yield is at 3.138%. That is up 2.8 basis points on the week.
The shorter end although off the high is still higher on the week.
With the 10 year yield down -15.4 basis points and the 2 year up 2.8 basis points, the yield curve collapsed by -18.2 basis points this week. Traders once again are anticipating a recession on expectations that the Fed will need to tighten to a hard landing.