A major inflection point is approaching for US yields, according to Peter Lee, Chief Technical Strategist at UBS in New York.
Lee says the 30-year Treasury Yield (TYX) is approaching the top of its 37-year downtrend channel and a breakout from this channel together with a higher-high above the 2013/2014 highs (3.98-4.00%) would confirm a major trend reversal (see Chart 1). In the meantime, he warns that a short-term overbought condition suggests it may initially pullback to initial support at 2.95-2.98%.
Similar price action is playing out in the 10-year (TNX) and 5-year (FVX) US Treasury interest rates. In fact, Lee points out that the TNX has already broken out of its downtrend and only now needs to close convincingly above its 2013/2014 high at 3.01-3.04% to confirm the structural trend reversal (see Chart 2).