Bond Market – Quarterly Review

CANDLES & TA:

The most important closure this week was the quarterly one, and I suspect most rarely evaluate yields from that perspective. The quarterly frame remains bullish—Q1–Q3 of 2025 did not form or confirm bearish candle signals. Moreover, the rate stayed above the 8-QMA, a very long-term support level.

However, the smaller frames signal a likelihood of continued rate cuts. The monthly printed a bearish continuation signal, and there is a fair chance that rates will travel all the way to the 50-month support level, approximately 3.65–3.8%. The 10D and weekly also indicate weakness ahead.

From the perspective of the quarterly frames, the Q4 closure will be extremely important. A close below 3.698% on December 31 could confirm a quarterly bearish reversal and signal further declines. Anything above will be bullish.

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 or even years, 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 very long term outlook remains strongly bullish.

Mid Term

Spread 10Y-2Y
(no change, refreshed chart)

The 10Y–2Y spread remains in a bullish upswing after September’s close with bullish continuation signals on multiple frames. Earlier candle signals pointed to rising market confidence and fading near-term recession risk—now the broader technicals support that view.

SUMMARY

10Y yields are slowly building bearish momentum that has now reached the monthly frame. However, the decline remains controlled—as if there’s reluctance to flip the very long-term frames, namely the quarterly, bearish. The decisive day is December 31: a year-end close below 3.698% would create a reversal combo on the quarterly frame and an annual Bearish Engulfing, opening a high-probability path to continued decline.

For now, Q4 looks bearish for yields. The big open question is the annual close.

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!