Bond Market – Weekly Analysis
There has been plenty of noise about the recent spike in yields. It is certainly news for those who have not been following our regular Bond Market reports.
For our readers, however, the move did not arrive out of nowhere. In this weekly report, we review the latest signals and momentum developments across the major Treasury frames, assess the broader structure for yields and bonds, and outline the key scenarios that could shape the next directional move.
CANDLES & TA:
Today, the US10Y made the move we have been waiting for since April 2025. On the weekly frame, after a 13-month consolidation, the yield signaled a breakout. If this move is confirmed over the next few weeks, we should be prepared for higher rates and, most likely, renewed Fed hikes.
Overall, the yield is bullish on practically all frames, supported by technically strong long- and very-long-term signals. At the same time, short- and mid-term frames have moved into overbought territory, raising the probability of a corrective pullback or consolidation before the larger trend continues.
The following key paragraphs are from the previous 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
(as 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 U.S. 10-year yield (US10Y) appears to have completed its first impulsive wave off the 2020 lows and may have already completed wave ii, with early signs that wave iii is now in progress.
Notably, this long-term chart has remained unchanged since December 2022, for over three years, underscoring the stability of the broader structure and reinforcing the long-term outlook.
Long Term
Some technicals are beginning to support the view that the current move higher is wave 3 of a larger degree. If this interpretation is correct, the next most probable target for the 10Y yield would be around 6%—a truly explosive move.
Spread 10Y-2Y – Risk of Recession!
The 10Y–2Y spread escalated the bearish odds up to the 4M frame in April. There is now a very high risk that the spread could turn negative again within the next 1–2 years. Please refer to the April Monthly report for more details. All prior assessments remain intact.
Canadian CA05Y
The Canadian 5-year yield continues to push higher, increasing pressure on the Bank of Canada ahead of its next meeting. The upcoming monthly close will be especially telling.
SUMMARY
The bond market continues to validate the higher-yield thesis we have been tracking for years. The US10Y has now signaled a potential breakout from a long consolidation, while Canadian yields are also pressing higher, increasing the policy pressure on central banks.
The broader message is that yields remain structurally bullish, even if short-term overbought conditions allow for pauses or pullbacks along the way. The market appears to be moving toward a more restrictive rate environment, not away from it.
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.
