"Stop me if you've heard this one before. There's this epic long-term inflection point defined by 10yr yield levels 1.84-1.86. It stretches back to
All of the above is from a post in April 2015. During that time, yields had been smacking into a 1.84-1.86 range and were ultimately unable to break through. We ended up all the way back up at 2.50 by June before eventually pushing back down and breaking below this technical zone in February 2016.
Before that, 1.84 had served as the dividing line between the magical, golden-era of low rates and everything else. Especially during late 2011 and most of 2012, yields were HIGHLY unlikely to break through that zone. It was a true inflection point! When they did break through, we saw a minimum follow-through of 20bps in a matter of days. In other words, a confirmed break of 1.84 is good for at least a move to 2.04 next week--or so history would suggest.
But it gets worse. Short, shallow breaks of 1.84 during rallies--those that only take closing yields 20bps lower or less--tend to result in much bigger sell-offs after yields move back above 1.84. And although yields did make it down to 1.53 on Feb 11th, they CLOSED the day at 1.644, making the most recent break fall into the "short, shallow" category, compared to the 2012 break.
So what does confirmation look like? How will we know if we're dealing with a break? It's
For what it's worth, in the bigger picture and longer term, I still don't see how rates don't end up at all-time lows
Will NFP be the singular nail in the coffin if it's super strong this morning? No. We'd need to see next week's ECB Announcement at the very least. But NFP could certainly get the ball rolling if it's strong enough.