Treasury Yields Are Poised to Rise: Technical Analysis

Treasury 10-year yields are poised to rise after breaking a 2012 downtrend, judging by trading patterns, according to DZ Bank AG.

Andy Cossor, the Hong Kong-based chief market strategist for Asia at Germany’s fourth-largest lender, drew a descending trend line connecting the highs in yields set in March and December. Extrapolating the line into 2013, it came to 1.82 percent on Jan. 2. Yields climbed through the level that day and have been above it since.

“We busted through that and sustained the break,” Cossor said. “It’s pointing to yields going higher.”

Benchmark 10-year rates were little changed today at 1.87 percent as of 1:51 p.m. in Tokyo, based on Bloomberg Bond Trader prices. The 1.625 percent note maturing in November 2022 changed hands at 97 25/32.

Ten-year yields will climb to 2.15 percent by year-end, according to a Bloomberg survey of banks and securities companies, with the most recent projections given the heaviest weightings.

The U.S. plans to sell $21 billion of 10-year notes today. It sold $32 billion of three-year debt yesterday and is scheduled to auction $13 billion of 30-year bonds tomorrow.

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

To contact the reporter on this story: Wes Goodman in Singapore at wgoodman@bloomberg.net.

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net