US Treasuries will trade sideways till year-end

After a torrid time last week, things are about to get a little more sedate for US Treasuries, says CornerstoneMacro’s technical team. They say while yields have risen quickly, they have perhaps rise a little too quickly. As such, the presumption is a lot of backing and filling at current levels – or – backing away/backing down from current levels, they say. Between now and year end, Cornerstone are thinking volatility in Treasuries abates substantially; in fact, they believe 10-Year Yields will end the year almost exactly where they are now. They add that yields are at a difficult level where ‘overhead supply’ comes into play. Cornerstone use a 150-day moving average on the 10-year to show that on various time series the bond sits on some very solid support levels, levels that haven’t been breached in 2019. Therefore, they recommend shorts take profits, with perhaps the most profitable trade till the end of the year is being short volatility over the next 3-4 weeks.