1Q2024 outlook pre-December NFP's

Jan 10

Back in December before the November non-farm payroll print, the US 10-year yield was sitting just below the 4.20% which coincided with the 50- and 200-day MAs. Since the stronger than expected payroll print of 227 thousand, yields have spiked aggressively to highs just above 4.7% earlier this week. (See the attached idea from December)

It is difficult to gauge how the payrolls will affect the US bond market today but I still believe the US 10-year yield will reach the 2023 highs of 5% given the strong upward trend. The turmoil in the UK gilt market also does not bode well for investor risk sentiment as we may be witnessing a historic resurgence of the so called bond vigilantes.

Over to the technical indicators, a short-term pullback towards the 50-day MA at 4.41% and the zone between 4.45% and 4.50% seems like the next move following today’s payroll print. The US 10-year seems a bit overstretched and the RSI indicator is hinting at a bearish divergence. This will however just be a short-term pullback and as long as we remain above the 50-day MA, a 5.00% yield on the 10-year seems inevitable.

Jan 10

Note

Apologies 1Q2025 outlook