US 10-year yields testing the upper end of the seven-month range - BBH

The market is wary that the push in US 10-year yields through the 2.40% level was simply a test on the upper end of the seven-month range and not a breakout, according to analysts at BBH. 

Key Quotes

“A break of 2.30% now would be seen as confirmation.  Recall that 2.27% was the low yield print in October.  The December note futures contract met the technical objective of the double bottom formed at the end of October.  A move now above 125-16 to 125-19 would signal a deeper correction to the sell-off that began in early September from almost 128-00.  The Slow Stochastics and MACDs warn of this upside risk in price.”

“Doubts that the initial tax reform proposals were not as friendly toward business as expected did not deter the S&P 500 from setting new record highs before the weekend.  The minor 0.25% advance on the week extended the streak to eight weeks.  The S&P 500 has fallen only one week since late August.  We are cautious and note that the RSI and MACDs have not confirmed the new highs.  During this run in stocks, the 20-day moving average of the S&P 500, which will start the new week near 2565, has offered support.”