Fed Gov Waller’s comments support yields; 10-yr breaks out of continuation pattern
The US 10-year Treasury has pulled back from a high of 3.2% over the last two weeks to its current yield of 2.82%. However, this may be a dip in the uptrend. In a previous article, we noted that the weekly time frame needed to correct from an overbought condition. This normalisation has now happened.
Yesterday, Federal Reserve Governor Christopher Waller delivered a speech titled "The Economic Outlook and Some Thoughts on a Soft Landing" at the Institute for Monetary and Financial Stability in Frankfurt. Here he maintained that he supports "having the policy rate at a level above neutral so that it is reducing demand for products and labour, bringing it more in line with supply and thus helping rein in inflation." To this end, he's not taking 50bps increases off the table until the Fed is closer to its target of 2%.
The US 10-yr now seems to have completed a falling wedge, which is a bullish continuation pattern. To this end, the stochastic has moved up as momentum builds (black ellipse). However, a positive cross of the EMAs is needed to confirm (red ellipse).
If the stochastic moves towards 80 and holds there (blue arrow), the next leg of the uptrend will be underway, and yields will be increasing. The treasury note's correlation coefficient with FXCM's USDOLLAR basket is 0.6 (red arrow). Therefore, any yield appreciation is likely to support the greenback.
References:
www.marketwatch.com
Russell Shor
Senior Market Strategist
Russell Shor is a Senior Market Strategist at FXCM, having been promoted to the role in 2025 in recognition of his depth of insight and consistent delivery of high-impact market analysis. He originally joined FXCM in October 2017 as a Senior Market Specialist.
Russell holds an Honours Degree in Economics from the University of South Africa, is a certified FMVA®, and a full member of the Society of Technical Analysts (UK). With over 20 years of experience in financial markets, his work is renowned for its clarity, precision, and strategic value across asset classes.
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