It is no secret that throughout 2014 Bank of America has been actively urging its clients to join the most crowded short trade of the year, the 10 Year Treasury, which also happens to be one of the best performing asset classes year-to-date, and one which just hit 2014 highs. However, with the 10Y yield plunging, BofA's chief technician, which as is widely known is another words for "momentum chaser" who has over the past year been branded as the new coming of the legendary Tom Stolper thanks to the inverse-accuracy of his calls, has changed his tune, to wit: "the trend in yield is lower." If there was something that could make us nervous about being long TSYs, this is it.
US 10yr yields target channel resistance, Stay bullish ESU4.
With risk assets coming under a bit of pressure this morning, US 10yr yields are pushing lower. However, into 2.301%/2.267 (retracement and 8.5m channel resistance), we look for a near term base and bounce. HOWEVER, this bounce remains temporary and corrective. It would take a break of 2.473% to indicate a turn in the medium term trend, NOT BEFORE.
Of course, pointing out that technical "analysis" in a day and age when the only thing that matters for the so-called market, is what goes through the brain of a few addled Princeton career economists, is idiotic goes without saying.