A three-year inverted head-and-shoulders pattern may be forming on US 10-year yields, according to David Sneddon and his team at Credit Suisse in London.
US 10-year yields have broken above their downtrend from 2021 at 1.495% (see Chart). This breakout increases Sneddon’s conviction that the market is building a larger three-year basing structure. The next medium-term support is at the 1.705% neckline, which he thinks will be broken before the end of the year and will confirm the inverted head-and-shoulders pattern. If this were to happen, Sneddon says it would likely take yields above the year-to-date highs at 1.775/82% and then to the next medium-term level at 1.965/2.00%. The size of the basing pattern (if confirmed), however, suggests an increase in yields significantly beyond this.