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Morning Notes — Bond Yields Consolidate Before Moving Higher

Bond Yields Consolidate Before Moving Higher

April 5, 2021

Ten year bond yields continue to consolidate below ~1.74%.  Bond prices are finally responding to deeply oversold conditions and expect the consolidation will take a little time before a backup in yields resumes.  The most bullish bond price scenario would result in yields fading toward ~1.45%, where they’d likely encounter significant selling pressure.  This scenario would result in many cyclical/value stocks reaching short-term oversold levels and an easy opportunity to add exposure.  The more probable outcome is for bond yields to coil just below 1.74% with selling pressure in the 1.62%-1.64% range.  If enough time passes, cyclical/value sectors will still reach short-term oversold levels, which investors should use to add exposure.

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