US 10-Year Treasury Note Yield Rises to 5.00% for the First Time in 16 years
Global equities markets succumbed to selling in the previous week as the US 10-year treasury note yield rises to 5.00% for the first time in 16 years. The primary reason why yields kept on rising is the resiliency of the economic data. US economic growth in the past quarter and jobs figures in the last several months have continued to be robust, underscoring that overall demand have remained strong and therefore may continue to place upward lift on inflation. In fact, headline inflation in the US has stayed at 3.7% in September, besting the market’s 3.6% forecast. Meanwhile, core inflation, while it has cooled to 4.1%, has remained above the Fed’s 2-4% target band. With these, futures market are now pricing in an off chance (0.1% to 2.0%) of a one 50-bps hike in 2024. From the technical end, the TNX will likely continue to edge higher until it encounters a hurdle at its 2006 to 2007 high of 5.20. A presence of a bearish divergence and overbought RSI condition across its daily, weekly, and monthly time frames, though, suggest that a pull back may be in the offing.
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