Nov. 10 (Bloomberg) -- Treasury 10-year note yields may climb to 3.70 percent over the next few weeks as yields on the 10-year Japanese government note rise, according to strategists at Citigroup Inc.

The U.S. 10-year note yield fell one basis point, or 0.01 percentage point, to 3.49 percent yesterday. The yield on Japan’s 10-year security touched 1.48 percent, the highest since June 17, as stocks rose. The Japanese bond has “generally led the moves in U.S. 10-year yields,” strategists led by Tom Fitzpatrick, chief technical analyst at Citigroup in New York, wrote in a research report yesterday.

The Japanese security’s yield may test 1.70 percent if it exceeds the year-to-date high of 1.56 percent, the analysts wrote. It posted a “significant weekly close” above the trend resistance line at 1.42 percent, they wrote. The 76.4 percent Fibonacci retracement against the weekly chart’s lows suggests further gains in yield, they wrote.

“If Japanese 10-year yields remain a leading indication for U.S. yields, then we can expect higher U.S. 10-year yields up to the 3.70 percent area over the days, or more likely weeks, ahead,” the Citigroup analysts wrote. The bank is one of 18 primary dealers that trade Treasuries with the Federal Reserve.

The U.S. will sell a record $25 billion of 10-year notes tomorrow.

Resistance is a level on a chart where orders may be clustered. A breach of one level often implies an extension of the move to the next resistance level. Fibonacci analysis is based on the theory that prices rise or fall by certain percentages after reaching a high or low. A failure to exceed one level indicates the security may move lower to test the next.

To contact the reporter on this story: Susanne Walker in New York at swalker33@bloomberg.net.

Last Updated: November 9, 2009 17:12 EST