US 10-year bond yields are on the rise once more, after the Fed announced it was ending the Supplementary Leverage Ratio (SLR) exemption for banks it initiated last year at the height of the coronavirus pandemic.
The exemption allowed banks to exclude deposits and bonds from their cash leverage requirements, giving them more operating liquidity. This announcement has sent bond yields rising once more, as financial stocks and the US indices start the day on a losing note.
Technical Levels to Watch
The 10-year US bond yield is pushing out of the consolidation area that looks like a bullish flag on the 4-hour chart. Following the pinbar formation on the ascending trendline and the 1.685 support level, the active 4-hour candle needs to close with a 1% upside penetration above the flag to confirm the breakout. This move could target the 1.800 psychological resistance initially, followed by a move towards 1.856 if the bullish momentum persists.
On the other hand, a decline below 1.685 is required to invalidate the pattern and aim for the 1.636 short-term support. Below this area, the 1.600 psychological support becomes a new target, after which 1.538 becomes an additional target to the south.
US10Y 4-Hour Chart