Continued US economic strength, improved prospects for a Trump Presidency has traders questioning US interest rate outlookKey US 2-year Treasury note futures sit above key technical level as rate cut expectations are paredWhether it reflects US economic exceptionalism reducing the need for large-scale rate cuts from the Federal Reserve or improved prospects for Donald Trump winning the US Presidential election, or a combination of both, it’s obvious the US interest rate outlook is dictating...
As price moves inversely to yield, recent declines indicate 2-year Treasury yields have been rising. The bottom pane in blue shows the influence Fed rate cut expectations are having on the futures contract, sitting with a rolling 20-day correlation of -1. Essentially, 2-year yields have always moved in the opposite direction to Fed rate cut probabilities over the past month.
104 is an important level overhead, often tested but rarely broken over the course of this year. Outside the false bearish break in July, it acted as strong support, hinting it may now act as strong resistance. Above 104, 104.80 and downtrend resistance around 105.90 are the levels to watch. Below, support is located at 103.357, 102.69 and again at 102.36.Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events.