$US10Y Reaches 16 Year High, Short-Term Forecast & Discussion

The US10Y has been extremely bullish since May 2023, and has gained more strength after the Fed's hawkish announcement that led to a "higher for longer" interest rate environment. The US10Y has broke through numerous resistance levels to reach its 16-year high. From a technical analysis perspective, the US10Y has a tendency to have strong bullish rallies with breaks above the Bollinger Band (marked by yellow lines). We are observing that scenario in the current bonds market. There is a likelihood that the rally continues for a few more weeks (approximately 1-4 weeks). However, I think the US10Y and bonds market are due for a correction back down to the EMA ribbon. A strong bond market hurts equities because investors perceive US10Y as a less riskier investment alternative. This is hurting SPX in the short term, but a peaking US10Y could also signal the bottom of the SPX correction at current levels. For now investors are waiting for Friday's jobs data after the Tuesday JOLTS job openings data came in worse than expected.