US: 10-year yields are close to a floor, potential for a move above 2% – Credit Suisse

Economists at Credit Suisse believe the downside for US 10yr Bond Yields from current levels is limited and that price action could be forming a new bearish continuation pattern, which would be confirmed above 1.635/645%. 

A longer-term yield base would be confirmed above 1.82%

“Our expectation is still that the downside in yields is likely to be limited and our medium-term bias is still in favor of higher yields. Going forwards then, a break above the next key support at 1.635/645% would now be sufficient to confirm a new bearish continuation pattern and take the market up to 1.775/82% and eventually beyond. The completion of a bearish continuation pattern would also sharply raise the risk of a longer-term yield base.”

“The now confirmed uptrend at 1.455/445% and particularly the channel bottom at 1.425% should now floor the market to avoid a deeper corrective setback. Whilst not our base case, the next levels below here are seen at 1.385%. The maximum correction we can envisage whilst still being consistent with a potential basing structure is a move to 1.295/285%, but this is still very much viewed as a low risk scenario.”

“US 10yr Bond Yields are increasingly threatening a long-term 2-year basing structure, which would eventually be confirmed above 1.82%. Thereafter, we look for a move to our prior medium-term objective at 1.965/2.00% and eventually on a 6-12 month horizon, the cluster of retracement resistances at 2.16/18%.”