Bond Market – Weekly Review

CANDLES & TA:

The US 10-Year Yield (US10Y) continues to move in a mostly horizontal range on the short- and mid-term timeframes, showing no clear breakout in either direction for now. While short-term momentum is relatively subdued, the 15-day frame holds a bullish tone, suggesting a quiet build-up beneath the surface.

Larger timeframes, including the monthly chart, are beginning to tilt bullish as well. That said, the structure still allows for a potential extension of a long-term bullish flag—possibly stretching further sideways or slightly downward—without violating any major support levels. This gives the market room to consolidate while keeping the broader bullish setup intact.

In summary, US10Y remains neutral in the near term, but the longer-term technicals suggest an underlying bullish bias may be preparing to reassert itself.

The following key paragraphs are from the previous monthly analyses, and I keep them for a long-term reference:

From the April 2024 monthly: “The yield ended in April with strong bullish candles across multiple frames and long and very long term odds remain bullish. The monthly frame recorded a 50/200 MMA “golden” cross at the beginning of May. It did not happen for 72 years. After it was recorded last time in 1952, the rates rallied for 30 years and reached 15.82% in 1981.” The cross expanded wider in May and we have no reasons for considering a reversal in this department.

I’d like to remind that in 2023, US10Y recorded several very long term signals, such as 8/20 EMA crosses on the quarterly and semiannual frames, which are extremely rare. For example, the quarterly 8/20 EMA cross last time happened in 1955. Following the cross, there were 26 years of rate increases from 2.7% to 15.8%.

RATE of GROWTH
(initially discussed on February 9, 2023)

In 2023, I discussed certain events and compared them to similar occurrences in the 1950s, noting that everything seems to be happening faster in the bond market this time around. The pace is markedly different, and I continue to maintain this hypothesis.

Looking at the annual candles, it’s evident that the current sets and the rate of growth are far more agile compared to the mid-20th century.

From 1940 to 1950, it took 18 years for the 10-year yield to climb from the bottom to 4.5%. This time, that same rate was achieved in just 4 years—a pace 4.5 times faster. If this trajectory continues, we could witness a strong acceleration in the coming years, potentially completing the current cycle by 2029-2030. It’s certainly something to keep in mind.

ELLIOTT WAVES

Very Long Term

On a very large scale, the US 10-year yield (US10Y) completed its first impulse wave from the 2020 lows. Wave ii may get extended for a few quarters, horizontally or slightly downward.

Notably, this chart has remained unchanged since December 2022, reinforcing the long-term outlook.

100-Y Moving Average
(no change)

The US10Y is bringing it closer to the 100-year moving average—an important long-term level. This line has been tested several times over the past few years. A decisive break and monthly close above it in December 2025 would mark a significant long-term milestone.

Long Term

In both scenarios on the table, the long-term outlook remains strongly bullish.

CA05Y

No changes to the long-term outlook for the Canadian bond market. If CA05Y closes July with its current candle—and the Bank of Canada’s rate decision on July 30 doesn’t shift the tone—a strong bullish monthly closure could trigger an acceleration in the prevailing trend. Be prepared.

SUMMARY

While the broader trend for interest rates remains bullish following the June closure, short- and mid-term trends continue to reflect uncertainty. This tug-of-war could persist if the upcoming monthly closure fails to deliver a decisive signal in either direction.

Canadian yields are currently on track for a strong bullish close on July 31. However, the Bank of Canada’s rate announcement on July 30 could inject volatility and potentially alter the current path. For now, patience is key. Unless clear evidence of a reversal emerges, the broader outlook for yields remains bullish.

From the previous analyses:

In 2024 and 2023, US10Y recorded several strong technical events that hadn’t occurred for decades, making it very difficult to reverse these trends. This suggests that higher rates are almost guaranteed in the coming years.

US10Y is also close to recording another significant event—a cross above the 100 annual moving average (MA) resistance line. This has not yet happened, and we are closely monitoring it, though it will require a lot of patience.

I would like to reiterate (as discussed earlier) that a prolonged period of higher rates is not necessarily damaging for markets. If we look at the period from the 1950s to the 1980s, a time of increasing rates, the markets grew on average 6-7% per year. We might see a similar trend in the coming years.

Happy Trading!