US Treasury 10-year yields (%) daily chart
The dovish Fed yesterday has more than vindicated the rally in the bond market over the last six weeks and what a rally it has been. At 5% yields in 10-years heading into November, it seemed like a given that yields would end the year much higher than where it started off. But right now, we might even see 10-year Treasury yields finish lower than where it left off at the end of 2022 at 3.88%.
What is standing out now once again is the technicals as seen above. 10-year yields are not only dropping below the 4% mark but also looking to fold below the 200-day moving average (blue line) at 4.03%. That will keep bond buyers in a strong position to round off the year as bond sellers have pretty much lost all semblance of control already.
It is frightening to think how drastic and quickly sentiment has turned over the last few weeks, all thanks to some aggressive push by broader markets in pricing in rate cuts for next year. The Fed yesterday was the ultimate test and Powell & co. certainly endorsed the notion that market players are on the right track at least, and that is more than enough.