US 2-Yr Consolidates With Neutral Fed Policy

Russell Shor, CFTe, MFTA FXCM

The below is the daily chart of US 2-Yr. Treasury yield. The red shaded area is characteristic of a mark-down phase i.e. the yield was declining. The note now finds itself in a sideways consolidation (blue shaded area). Analysis of the 2-Yr. note is instructive because it is sensitive to the Fed’s monetary policy bias. We know that the Fed has moved away from a hawkish policy, which is reflected by the current consolidation. However, we note that the RSI is moving towards 50. If it crosses above this level and the green 5-day EMA crosses above the orange 10-day EMA it introduces a possibility that the market is expecting the Fed to revert back to a hawkish policy. This would be an interesting development and we continue to monitor.

Author

Russell Shor, CFTe, MFTA

FXCM

Russell Shor (MSTA, CFTe, MFTA) has an Honours Degree in Economics from the University of South Africa and holds the coveted Certified Financial Technician and Master of Financial Technical Analysis qualifications from the Interna

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