Since testing and ultimately being rejected by the upper limits of last September's highs, 10 year yields have consolidated in a narrow 20 basis point range between ~ 2.6-2.8%.
Our general take on long-term yields has been that despite their historically low disposition, they became comparatively stretched to an extreme last year after the Fed pivoted their policy posture with respect to QE. We have been looking for a long-term range to develop between the extremes of the past two years, naturally with yields working their way lower through the balance of this year.
In the near term, we see the prospects for an acceleration of trend lower - should yields breach the recent lows from early this month.
The banking sector, which has benefited from a strengthening yield environment over the past few years, looks particularly vulnerable and at a curious retracement position.
Gold, which took the brunt of collateral damages from a rising rate backdrop last year has been leading the reversionary charge higher.
