Alroy Commentary - 10-year US Treasure yields is going up
While 10-year US Treasury yields show a sign of going up, Investor should further reduce government bond holdings. Since Fed sent signal of ‘tapering’ in May, 10-year US Treasury yields rose significantly, and reached close to 3% in September. Even though the yields went down after Fed decided to delay ‘tapering’, it didn’t change the reality of ‘tapering’. Especially, after the better-than-expected US labor market published last week, expectations for tapering have also been moved forward by market participants.
Besides fundamental factors, technical analyst also shows a signal of yield growth. The 200-day yield moving average keeps going up, even though the moving momentum has been falling since September according to Credit Suisse report. The research team regards the 10-year US Treasure yields will reached the resistance level of 3% in coming month. If the yields break the resistance point, it could potentially reach 3.5% on first half year 2014.
Under the condition of yields going up, we regard that US dollar will be stronger and bond price will decline.
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