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U.S Treasuries Might Finally Be Ready to Stage a Breakaway

  • Rate-option skews have flattened, indicating bull-bear battle
  • Triggers include Trump’s address to Congress, Yellen’s speech

U.S. Treasury yields may break out of a two-month holding pattern as the tug-of-war between bulls and bears is decisively settled by President Donald Trump’s speech to Congress next week and a slew of upcoming data.

The skew between payers and receivers on 10-year yields has dropped to zero from about eight basis points seen a week after Trump’s election, suggesting increased demand to protect short bond positions.