Bond Market – Weekly Analysis
The bond market is approaching another important technical decision point, with the yield curve, Treasury spreads, and key yields beginning to send signals that could shape the next move across fixed income—and potentially the broader financial markets.
In this weekly Bond Market Technical Analysis, we examine the latest yield-curve developments, Treasury spreads, candlestick structures, momentum signals, and critical support and resistance levels. The focus remains purely technical: identifying the most likely scenarios, confirmation points, and risks based on what the market itself is signaling—rather than what the Fed has said, implied, or may be thinking.
CANDLES & TA:
Following a strong bullish monthly close, the US 10-year yield pulled back during the week but recovered, finishing with a broadly neutral weekly candle and predominantly bullish technical signals. The larger 10D and 15D frames, which also closed today, reinforced the bullish stance across the mid- and long-term timeframes.
Overall, the 10-year yield remains bullish until it produces a strong bearish signal, preferably on the monthly frame.
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 continues to hover within just a few basis points of the 100-year MA, a level we have been tracking since December 2022. The first attempt to break above it was rejected, but the underlying bullish momentum has not disappeared. With five months still remaining in the year, this long-term signal has plenty of time to develop.
A confirmed cross above the 100-year MA on December 31 would be an extraordinary technical event—a repeat of the 1956 signal, 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 may have now completed wave ii.
Notably, this long-term chart has remained unchanged since December 2022 — for more than three years. This underscores the stability of the broader structure and reinforces the long-term outlook.
Long Term
The red count remains primary. The wave up is attempting to break out of the flag/pennant formation, while the blue count for a larger correction still remains on the table.
Spread 10Y-2Y – Risk of Recession!
The July monthly candle of the 10Y–2Y spread closed bullish, but this development still requires strong confirmation.
The larger-frame structure remains difficult to overturn. Earlier Bearish Engulfing combinations on the 2M, 3M, 4M, and 6M frames continue to dominate the bigger picture, suggesting that the latest monthly bullish close may represent a bounce rather than a confirmed trend reversal.
Given this setup, a move back into negative territory remains an important long-term risk. Timing is the main unknown, but the larger structure suggests it could develop 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 clearly failed to extend the bearish odds in June and was immediately met by a strong bullish counter move in July. The monthly frame closed with a powerful bullish reversal candle above the 100 MMA, opening the door for further upside acceleration toward the flag target.
The 5-year yield remains bullish until it signals otherwise.
SUMMARY
The bond market remains technically firm, with yields retaining a broadly bullish bias across several key frames. US10Y continues to hold a constructive mid- and long-term structure, while its proximity to the 100-year MA keeps an exceptionally rare long-term breakout scenario in play. The Canadian 5-year yield is also bullish after a strong monthly reversal above the 100 MMA.
At the same time, the 10Y–2Y spread remains the main source of caution. July produced a bullish monthly candle, but the larger 2M–6M Bearish Engulfing structures still dominate the broader picture, leaving the risk of another move toward inversion unresolved.
Overall, the technical message from bonds remains one of persistent yield pressure rather than a confirmed trend reversal. A sustained decline in yields would require much stronger bearish confirmation, while the curve continues to warn that the longer-term macro structure is not yet settled.
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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.
