U.S. Treasuries jumped higher following a better-than-expected five-year auction while stocks continued to fall back. The auction saw bidders take a significantly lower yield to own the issue, foreign buyers with a record-high take while overall demand was at the highest since November 2014. Technicians were calling for higher yield/lower price levels in the near-term although some pointed to some corrective action ahead.
The 30-year was boosted to trade to a low yield/high price since Dec. 8 at 3.0795% from an early 3.136%. The five- and 10-years rallied to levels last seen at the Dec. 14 Federal Open Market Committee’s more hawkish turn, with the five trading to 1.998% from 2.07% and and the 10 to 2.504% from 2.565%.
Wells Fargo Investment Institute noted Wednesday that technical indicators are pointing to lower prices/higher yields on the 10-year with the yield holding through the 2.50% point. They see the next “possible stopping points for yields” near the 2.60% to 2.65% levels seen in the summer and fall 2014. Beyond that the psychologically significant 3.00% point. WFII adds on the other side the 2.50% flips to resistance from support, with the next stop the 50-day moving average near 2.16% and the 200-day moving average near 1.80%.