US 10Y TREASURY: Crossroad ahead of inflation data
The 10Y Treasury yields rose near multi week highs during the previous week, moving around 4,16% and 4,21% as markets digested the latest US jobs data on Friday. Yields initially climbed on the mixed December payrolls data, with modest job gains, but a drop in the unemployment rate reinforced expectations that the Fed is unlikely to cut rates imminently. The December jobs report showed weaker payroll growth than expected, with only 50K jobs added, yet the unemployment rate unexpectedly fell to 4,4%. This combination boosted short-term rate expectations and helped push 10Y yields higher.
The 10Y yields are currently on a tricky part of charts. Friday's move above the 4,20% strong resistance level, indicates that there is potential for higher levels in the coming period. However, on the opposite side, a short term reversal is also quite probable. The week ahead brings US inflation data, which might trigger some higher volatility in the US Treasury market. At this moment, the level of 4,14% has the highest probability of occurrence in the coming short term period. However, considering mixed jobs data from this week and expected inflation figures in the week ahead, surprises should not be overseen.