George Davis, Chief Technical Strategist at RBC Capital Markets, has raised his 1 to 3 month target for US 10-year yields to 0.85.

Davis says a close above 0.73 would add to bearish momentum in bonds, leading to targets of 0.78 and 0.84 (see Chart). However, he expects the highs between 0.89 and 0.96 to limit the topside in yields.

Conversely, Davis thinks a return below 0.62 is needed to end the current corrective phase and shift the focus back down towards 0.57 and 0.50.

See Chart.