Treasury 10-Year Resistance at 2.62% Yield, RBS Says: Technical Analysis

Treasury 10-year notes will encounter resistance at a yield of 2.62 percent, which is about the low for the security in April 2009, according to Royal Bank of Scotland Group Plc.

“Pay attention to places that are congestion zones, even if they are far away,” said John Briggs, an interest-rate strategist in Stamford, Connecticut, at RBS Securities Inc., one of the 18 primary dealers that trade directly with the Federal Reserve, in a phone interview.

The security will receive channel support at 2.95 percent, which represents a trend line from the high yields in June and July, Briggs said. The 10-year note yield reached highs of 3.42 percent on June 3 and 3.13 percent on July 14.

The 10-year note yield was at 2.75 percent at 3:45 p.m. in New York after dropping yesterday to 2.6797 percent, the lowest level in 16 months, according to Bloomberg generic data.

The market is pushing for a new range in 10-year note yields, which could reach as low as 2.50 percent and as high as 3.12 percent, Briggs wrote in a research note.

The benchmark yield rose to 2.60 percent in a sell-off on Jan. 6, 2009, after touching 2.05 percent on Dec. 31, 2008, near its record low of 2.0352 percent.

In technical analysis, investors and analysts study trading patterns to forecast changes in a security, commodity, currency or index. Support and resistance refer to lower and upper boundaries, respectively, of a trading range where buy or sell orders may be clustered.

To contact the reporter on this story: Daniel Kruger in New York at dkruger1@bloomberg.net

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