US 10-Year Treasury Yield Breakout Fails, Range Reasserts

US 10-Year Treasury Yield Breakout Fails, Range Reasserts

Treasury yields declined on Tuesday as investors grew more optimistic that talks to reopen the Strait of Hormuz could make progress, easing inflation concerns at the start of a holiday-shortened week packed with key U.S. data. The U.S. 10-year Treasury yield ended Tuesday at 4.491%, down about 8 basis points, and hovered near 4.47% on Wednesday.

Technical Outlook

The yield had broken above the top of a large symmetrical triangle pattern on May 15, hinting at a potential pickup in volatility. However, the breakout failed as the yield reversed sharply, falling below a key monthly resistance line around 4.58% and back under the upper monthly Bollinger Band. The monthly Bollinger bandwidth is on track to hit its lowest level since May 1989, suggesting a coiled spring that rarely lasts.

Support and Resistance Levels

The yield is now testing support between 4.48% and 4.44%. A move back above 4.58% would bring prior highs into view, including the January 2025 peak at 4.81% and the 5% area. On the downside, a break below the 20-month moving average near 4.25% would suggest a trend turn, opening the door to the lower end of the range around 4.00% to 3.92%.