US 10-year yield stuck in a range, S&P 500 marginally lower - BBH

The US 10-year yield was turned back the 2.40% area and has been stuck largely between 2.30% and 2.40% this month, points out Marc Chandler, Global Head of Currency Strategy at BBH. 

Key Quotes

“The risk is that yields fall further.  Indeed, there appears to be a head and shoulders pattern in the yields, with a neckline just above 2.30%.   A break warns of a move toward 2.10%.  Since people buy a bond at a price rather than a yield, insofar as technical analysis is about group psychology, it is often preferable to conduct the technical analysis on the prices.”

“The head and shoulders pattern on the December note futures may not be as aesthetically pleasing, but it is there too.  The neckline is found near 125-11 at the start of the new week.  If convincingly penetrated, the pattern projects toward the late September highs a little above 126-00, which would bring it to the 50%-61.8% retracement of the sell-off that from the year's high recorded in early September.”      

“The S&P 500 eased in the first half of the week and closed below the 20-day moving average on November 15 for the first time since late-August.  It gapped higher the following day.  The 0.82% rally on November 16 was the largest gain since September 11. However, without follow through buying ahead of the weekend, the S&P 500 finished marginally lower on the week.  It is the first back-to-back loss in three months. The technical indicators do not give one much confidence at the moment, though the S&P 500 is less than 1% from the record high.”