" asked two technicians to cut through the noise and share the chart that explains the market dynamics in play right now."It's most important to highlight the Fed's balance sheet, not the massive expansion we've seen over the last decade, but really the Fed's balance sheet over just this year," Baruch said Thursday. "They're buying debt, and ultimately, what you're seeing is as you're underpinning the Treasury complex you're suppressing yields.
Bond yields are unlikely to move much lower, though, according to Craig Johnson, chief market technician at Piper Sandler. "I don't think you're going to get the 10-year bond yields to pull back a lot further from here," Johnson said during the same interview. "You can see that we've pulled back to almost the rising 200-day moving average," highlighting that as an area of support."We've come from 50 basis points to 1.77% just a few months ago," he said. "Then that decline in yields started to accelerate.
He says both of those narratives have hit an extreme. Should the 10-year break below 1.23%, though, he says, it could spook investors by suggesting the recovery has a long way to go.
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