Bond Market – Weekly Analysis
In this weekly update, we examine the latest US10Y signals through the lens of technical structure, momentum, candle formations, and key timeframes to assess what the bond market may be telling us now.
The U.S. 10-year yield remains one of the most important macro indicators on the board, with potential implications for equities, financial conditions, housing, credit, and broader risk appetite. As yields approach another important decision point, the next few sessions could help clarify whether the recent move is only a pause — or the beginning of a more meaningful shift.
We will also revisit the 10Y–2Y spread, which continues to provide an important read on the health of the yield curve, and take a quick technical look at the Canadian 5-year yield to assess whether Canada is confirming, diverging from, or quietly following the broader U.S. bond-market message.
CANDLES & TA:
The bond market delivered no major surprises this week.
As expected, the recent pullback looked tactical rather than structural. US10Y has now confirmed a bottom on the weekly frame and reestablished the bullish trend on the daily frame.
The odds remain bullish until the yield signals otherwise.
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%.
100-Year Moving Average
US10Y has moved dangerously close to the 100-year MA that we have been tracking since December 2022.
A cross above this line on December 31 would be epic — a repeat of the 1956 event, almost 70 years ago.
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 likely completed its first impulsive wave off the 2020 lows in September 2023 and has been working on corrective wave ii since.
Notably, this long-term chart has remained unchanged since December 2022 — for more than three years — underscoring the stability of the broader structure and reinforcing the long-term outlook.
Long Term
The red count remains primary. However, the blue count for a larger correction remains on the table.
Spread 10Y-2Y – Risk of Recession!
(no change in this section, just an updated chart)
As discussed earlier, the entire yield curve continues to show unhealthy development. As a result, in June, the 10Y–2Y spread recorded another outstanding signal — a Bearish Engulfing on the semiannual frame.
Considering the latest progression of Bearish Engulfing signals from the monthly to the semiannual frame, a move back into negative territory has now been upgraded from a possibility to an imminent risk. Timing remains the main unknown — perhaps 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 closed the week with bullish messages, signaling willingness to climb higher.
A strong bearish failure at the end of June opened an immediate countermove, while the freshly formed 8/20 EMA bullish cross on the daily frame further increases the probability of a larger rally.
SUMMARY
The bond market delivered no major surprises this week. As expected, the recent pullback in US10Y looked tactical rather than structural. The yield has now confirmed a bottom on the weekly frame, reestablished the bullish trend on the daily frame, and remains positioned for further upside unless it signals otherwise.
The long-term picture also remains intact. US10Y continues to track the same broader structure we have followed since December 2022, with the yield likely working through corrective wave ii after completing the first impulsive wave off the 2020 lows. The approach toward the 100-year MA remains one of the most important developments on the long-term chart. A confirmed cross above that line would be a historically significant event.
The yield curve continues to send an unhealthy message. The 10Y–2Y spread recorded a Bearish Engulfing on the semiannual frame in June, extending the progression of bearish signals from monthly to semiannual timeframes. This upgrades a move back into negative territory from a possibility to an imminent risk, with timing still uncertain — possibly over the next 1–2 years. Historically, such curve deterioration remains one of the key recession harbingers, and this signal should not be ignored.
The Canadian market is also leaning in the same direction. CA05Y closed the week with bullish messages, supported by a strong bearish failure at the end of June and a fresh daily 8/20 EMA bullish cross. This increases the probability of a larger rally in Canadian yields, suggesting that Canada is not yet breaking away from the broader North American rate-pressure theme.
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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.
