Treasury 30-Year Bond Yield Near Key Level, May Tumble: Technical Analysis

The Treasury 30-year bond yield may fall to a three-month low of 4.48 percent after declining below a key resistance level on concern Greece’s government will cut or delay payments to bond investors, according to UBS AG.

“Sovereign credit issues are a factor influencing events in the Treasury market,” Chris Ahrens, head of interest-rate strategy at UBS in Stamford, Connecticut, said in an interview. The firm is one of the 18 primary dealers that trade with the Federal Reserve.

The long bond’s yield breached resistance at 4.62 percent and may touch 4.48 percent if it breaks through the 4.54 percent level, Ahrens wrote in a note to clients.

The 30-year yield touched 4.59 percent today, the lowest level since March 23, when it reached 4.56 percent. It touched 4.8559 percent on April 7, the highest level since October 2007.

Factors contributing to a recent rise in bond prices include “subdued inflation figures which look set to move even lower,” Ahrens wrote. Consumer prices excluding food and fuel were unchanged for March from the previous month.

Near-term risks include debt supply next week, he said. The U.S. will sell a record $129 billion in notes, the Treasury said today: $44 billion in two-year debt, $42 billion in five-year securities, $32 billion in seven-year notes and $11 billion in five-year Treasury Inflation Protected Securities.

Resistance is an area on a chart where orders may be clustered. A breach of one level often implies an extension of the move to the next level.

In technical analysis, investors and analysts study charts of trading patterns to forecast changes in a security, commodity, currency or index.

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

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