Following the blowout non-farm payrolls number (Feb 3rd), 10-year yields enjoyed a productive week, confirming a minor base in the 3.33% area ahead of a falling diagonal breakout. This has the 10-year poised to re-test 3.90% with possible room to test the psychological 4% region. Look for over-stretched daily indicators to limit potential upside after Tuesday's US Inflation report. That said, a hotter CPI print could trigger a move to 4% easily! At that point, 3.90% would likely become support for a long-term target of 4.25% to 4.35%. If, however, the 3.90% region proves to be more resistant than expected or perhaps isn't even tested, then the 3.58% to 3.40% area will largely determine whether US 10-year yields are continuing to trend higher.
Sell ZN (10-year futures ) @ spot (112'22) or Buy ETF TBT @ 30
Target: ZN 112 (1st) 110 (2nd) TBT 32.67 (1st) 40 (2nd) target***
Stop: ZN 114 TBT 28.13
