US 5Y Treasury yields are approaching a key level, but as BofAML’s Macneil Curry warns, the MOVE Index (the Treasury market equivalent of equity’s VIX) is more important to focus on…
As BofAML’s Macneil Curry explains,
Key levels approach in US 5yr Treasuries, but the Move Index might be more important.
US 5yr Treasury yields are approaching key long term support.
Specifically, 1.809%. A close through here would complete the year-long contracting range and mean resumption of the long-term bear trend, exposing 2.025%/2.055% and eventually 2.18%/2.25%. A breakout in 5s could also prove to be the catalyst for a turn higher in Treasury vol.
A break above 65.12 in the MOVE Index would confirm the turn in trend, targeting 73/75 and potentially beyond. With 5s on the verge of a breakout, and we must be clear, we need to see a close above 1.809% to confirm a breakout. Furthermore, while USDJPy pushes on higher, a turn higher in US Fixed Income Vol could lead to a pretty nasty snapback in the carry trade.
Finally, 10s continue to trend bearishly and are targeting key support at 2.591%/2.601%.
A close through here exposes further upside for the Jul-03 high at 2.694%. Through this latter level confirms a resumption of the long term uptrend for a push towards the 2014 highs at 3.049%.Â
Finally, while the cash index has broken below 1990.52 support, ESU4 has not yet broken its equivalent zone at 1985.75.
A close below here is needed to expose the 50d avg (1968.25 in ESU4 & 1971.71 in cash).
