The US 10 year yield moved to a new year low at 3.417%. That took the yield just below the 50% of the move up from the August 2022 low at 3.426%, but remained above the December low yield of 3.404%.

US yields
US 10 year yields ping ponging in a 50 bp range

The combination is forming a nice floor for the 10 year yield at the 3.40% area.

Having said that, looking at the chart above, the high that we saw in December stalled near the November 14 high at 3.904%.

So since November 14 high yield at 3.904%, the yield has moved down to 3.40%, and back up to 3.90%, and now back down to 3.40%.

There a lot of symmetry in that chart.

With the Fed moving in 25 basis point increments, it kinda makes sense from the range standpoint. The yield is trading within a 50 basis point range. In more bullish times, 3.40% is a low limit and 3.9% is a high limit.

Putting it in fundamental perspective...

  • Do we go into a recession (3.40%)? Do we not go in a recession (3.90%)?

Or

  • Do we not have inflation (3.40%)? Do we have inflation (3.90%)?

That seems like the playbook for now. If so, look for a wander higher. Watch for a move above 3.50% to be the next upside target to get to and through.