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The U.S. debt sell-off sweeps the world! The geopolitical situation has suddenly changed, and the MACD top divergence indicates that a major reversal is coming?
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Hello everyone, todayXM Forex will bring you "[XM official website]: The U.S. debt sell-off is sweeping the world! The geopolitical situation has suddenly changed, does the MACD top divergence indicate that a major reversal is xmaccount.coming?". Hope this helps you! The original content is as follows:
Institutional data on Friday (March 27) showed that the U.S. bond market suffered a significant sell-off today, with yields across the board rising to their highest level since July last year. Driven by inflationary concerns caused by escalating tensions in the Middle East and soaring energy prices, both 2-year and 10-year U.S. Treasury yields broke through key resistance levels. Although the relevant debt relief period was extended, it failed to alleviate the market's fear of a global inflationary spiral, and the short momentum in the bond market continued to be released. In this round of bond market fluctuations, macro geopolitical risks and micro technical signals are strongly resonating. Fundamentally, abnormal fluctuations in energy prices have become the core variable that disturbs inflation expectations. The simultaneous decline of the bond markets of major global economies shows a sharp contraction in risk appetite. On a technical level, U.S. bond yields of key maturities have all touched the extreme area of the upper Bollinger Band, and the MACD indicator has shown a divergence signal worthy of vigilance. This article will provide an in-depth analysis of the logic behind swap spreads and yield curve flattening, xmaccount.combined with precise technical ranges, to reveal potential reversal signals and support and resistance logic under the current high-level shock pattern.
Energy premiums have reignited concerns about inflation, and the geopolitical situation has disrupted bond market pricing
According to the latest information from mainstream overseas institutions, the sell-off in the U.S. bond market has begun to take shape during the Tokyo trading session, and will further intensify with the opening of the London and New York sessions. The core trigger lies in the evolution of the situation in the Middle East. Although relevant parties extended the deadline for the reopening of the Strait of Hormuz, the market did not buy it. On the contrary, as military deployment increasesAs news broke, Brent crude oil prices soared to $111.18, and WTI crude oil prices hit $97.22, with intraday gains exceeding 2.5%.
This cost-push inflationary pressure driven by energy costs has directly raised market expectations for global central banks to maintain high interest rates or even further raise interest rates. Data shows that the 10-year U.S. Treasury yield has risen to around 4.456%. At the same time, the performance of the swap market (Swaps) was relatively lagging. Although the swap spreads increased slightly, the 5-year swap spreads performed abnormally, reflecting the hesitation of funds in term selection. The logic of market transactions has shifted from a simple policy game to a dual narrative of risk aversion and inflation prevention of "high inflation, high interest rates, and high risks."
Short-end yields led the rise, and the flattening characteristics of the curve were highlighted
Technical data shows that the adjustment range of 2-year U.S. bond yields is significantly greater than that of long-end varieties. The current 2-year U.S. Treasury yield is at 4.001%, a cumulative increase of approximately 72 basis points from the February low, while the 10-year yield has increased by approximately 54 basis points over the same period. This asymmetric upward speed has led to the further flattening of the U.S. bond yield curve. The 2-year/10-year interest rate spread has widened to 46.38 BP, and the 2-year/30-year interest rate spread has reached 98.1 BP.
From a supply and demand perspective, the "belly zone" where the 5-year U.S. bond is located is under the greatest pressure. Swap spread data showed that the 5-year swap spread was reported at -34.75, narrowing by 0.25 during the day. This uneven distribution of selling pressure suggests that investors are focusing on hedging short-term inflation risks. In addition, the spillover effect of Japanese government bonds (JGBs) cannot be ignored. The weakness of the yen and the persistence of domestic inflationary pressures in Japan have jointly pushed up the yield requirements of global debt.
2-year technical analysis: divergence concerns after breaking through key resistance
In the 240-minute level cycle, the 2-year U.S. Treasury yield showed a strong unilateral upward trend. The current price has successfully broken through the previous horizontal resistance level of 3.992% and is running above this level. The Bollinger Bands indicator shows that the middle track is at 3.926% and the upper track is at 4.021%. Yields are currently close to the upper band, indicating strong short-term bull momentum, but as prices have reached areas of extreme pressure, the probability of a technical correction is increasing. Logic shows that the MACD indicator is sending a cautious signal. Although DIFF and DEA maintain their long position, the height of the red column has narrowed significantly xmaccount.compared with the peak in mid-March. This sign of top divergence of "prices reaching new highs but indicators not reaching new highs" indicates a marginal weakening of bullish momentum. In the short term, the strong resistance range for the 2-year U.S. Treasury yield is locked at 4.027% to 4.035%. If it cannot effectively stabilize, it may retest the mid-range support of 3.926%.
10-year technical analysis: High game in an overbought state
The trend of 10-year U.S. bond yields is highly synchronized with the short-term, but the overbought characteristics are more significant. At the 240-minute level, the latest quotation of 4.473% has exceeded the upper Bollinger Band (4.463%). From a morphological point of view, after hitting the bottom of 3.925% on February 27, the slope of the yield has steadily increased, and the consecutive positive lines indicate that the market's sentiment of shorting debt is still being released. However, rigorous technical analysis points out that the 10-year yield is also facing divergence pressure. Although the MACD red column is slightly enlarged, the overall strength is inferior to that of the previous period. The current price is in the historically high range, and the previous resistance level of 4.439% has been transformed into short-term support. Logic shows that if the geopolitical situation shows any signs of easing, the overbought 10-year yield will easily trigger profit-taking. The downside support will focus on the 4.378% (middle Bollinger Band track) and 4.293% range.
Trend Outlook
In the short term, U.S. bond yields are expected to remain high and fluctuate, and geopolitical rhetoric and inflation data will continue to be the core of pricing. Since both the 2-year and 10-year varieties are in the overbought zone near the upper Bollinger Band, and the MACD top divergence signal is beginning to appear, the space for further rises in yields in the short term is limited, and there is a technical pullback demand to move closer to the middle track.
Long-term logic shows that as long as energy prices remain high and global inflation expectations do not see a fundamental turning point, the bottom support of the yield curve will continue to move upward. The 2-year yield is expected to find a new balance in the range of 3.830% to 4.030%, while the center of gravity of the 10-year yield may remain above 4.300%. Investors will need to pay close attention to the persistence of the flattening of the yield curve, which often signals market caution about long-term growth prospects.
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