The two-year note is trading near highs for the day. The current yield is at 4.194% up 9.1 basis points. The high yield reached 4.207%. The move above 4.20% today was the first since March 22. The low yield for the month came on April 5 at 3.646%. On Friday Fed's Waller gave the issue the most recent goose to the upside when he said the Fed was not making progress on inflation and that there was room for further rate hike's (as in plural). Those comments took the yield up from about 4.06%.
Looking at the hourly chart, the price is moving away from the 100 and 200 hour MAs which are down at 4.03% and 3.957%. The yield has been trading above and below those MA since March 28, when the yield was able to get above the 200 hour MA for an extended time period. Since mid-March, the yield has waffled between 4.25% on the topside and down to 3.55% below. There is additional support at 3.646%.
The 2 year yields cycle high since the Fed started its tightening process reached 5.085% back on March 8th. The Fed raised rates by an additional 25 basis point hike on March 22 and are expected to hike by an additional 25 basis points in May. to a range of 5.0% to 5.25%.
As a result, the markets are still running ahead of the Fed.
Does the market give in to the Fed and continue to push higher?
A move above 4.25% will give the techincals more of a boost.
What would hurt that idea?
A move back below the rising 100 hour MA currently at 4.031% and then the 200 hour MA at 3.956%.
Meanwhile the 10 year yield is also moving higher. Like the 2 year, the yield is back above the 100/200 hour MAs with momentum and is above the 38.2% of the move down from the March high near 4.08% at 3.57%. It is looking to test the March 29 high near 3.61%.
Stay above the 38.2% (at 3.572%) and the 100 hour MA at 3.456% (and moving higher), keeps the upside move in play.
