US 10Y TREASURY: at overbought side

TVC:US10Y   US Government Bonds 10 YR Yield
Fed Chair Powell's speech after the FOMC meeting, held on Wednesday significantly moved the markets during the second half of the previous week. A “higher for longer” wording used by FOMC members was not welcomed by the market. Fed Chair Powell mentioned another rate hike till the end of this year, with an expected rate cut somewhere during the end of the next year. FOMC projected reference rates to end 2024 at 5.1%. Such projections implied immediate market reaction and 10Y yields reached their highest levels since 2007 and level of 4.50%. Yields are ending the week at a level of 4.43%.

RSI index reached a clear overbought side, which would in the case of 10Y yields, mean that the market had priced in new information received from Fed Chair Powell. There will be another rate hike till the end of this year, and a level of 4.5% has been priced. From now on, it could be expected some relaxation in the yields, which might return slowly to the level of 4.3% in the coming period. The level of uncertainty is currently increased on the market, but at this moment, further move beyond 4.5% level should not be expected.


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