US 10 year yield makes a new 2014 low as it takes out key 2.56/57% support

Yesterday we noted how treasury yields declined on the back of poor US April Retail Sales, which saw the ‘control’ reading drop to -0.1% vs. expectations of a build by +0.5% MoM. As a result with this as a key input that most economists use to come up with their consumption estimates and consumption making up a large share of US economic growth, this has led to revisions lower for US 2Q GDP. Additionally, later in the session we noted the continued decline on Twitter as well as the potential bearish implications this could have over the ensuing sessions:

Sure enough this bearish momentum carried over today, despite higher than expected April PPI (+0.6% vs con. +0.2% m/m), and the US 10-year yield broke below a key level of support at 2.56/57% which saw a convergence of the 2014 low, trendline support (drawn from the July low) and the weekly Ichimoku Cloud top. As we noted two weeks ago, “should the US 10-year yield 2014 low at 2.568% give way over the coming sessions, next levels to watch: 2.50% (psychological & barrier/option related), 2.469% (Oct. 2013 Low), 2.413% (38.2% retracement), 2.40/41% (H&S measured move objective)” and finally 2.33% (weekly Ichimoku Cloud bottom). Additionally it may be prudent to keep an eye on weekly RSI as it is currently testing the key 40/45 zone, which is often characteristic of where bulls may look to reenter the market, however a break below this level would potentially signal a further retrenchment in yields over the coming weeks/months.

Chart Source: Bloomberg, FOREX.com