- The US 10-year yield rises above the 200-day SMA.
- Further gains may remain elusive on coronavirus concerns.
The US 10-year treasury yield has found acceptance above the 200-day simple moving average (SMA) for the first time since December 2018.
While the benchmark yield is seen at 0.864%, the 200-day SMA is located at 0.828%. Back in December 2018, the 10-year note was yielding nearly 3%.
The yield has increased by over 30 basis points over the past three months on expectations for additional US fiscal stimulus and ring inflation expectations.
Fed unveils new measures
The yield jumped nearly five basis points on Friday after the Federal Reserve (Fed) lowered the barriers to its lending program for smaller businesses. The central bank reduced the minimum loan size to $100,000 from $250,000 and eased restrictions on debt for companies already participating in the Paycheck Protection Program, as reported by CNBC.
However, the breakout above the 200-day SMA would be short-lived if the coronavirus cases in the US and across the globe continue to rise, raising the specter of a deeper economic slowdown. Also, if the US elections end on a contentious note, the markets would turn risk-averse, boosting demand for Treasuries and pushing yields lower.