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Treasury yields fall further as the unrelenting bid in bonds continue

10-year Treasury yields down by nearly 7 bps today to 1.25%

That’s the lowest since 16 February as bonds continue to rally and that is arguably sparking jitters in the market, with no clear cut answers floating around.

A key question that is being posed by the bond market right now is, are we seeing the death of the reflation trade? And why exactly is that the case?

Supply chain disruptions are going to persist for some time yet and the Fed did not really shoot down suggestions of tapering before the end of the year. Yet, yields are falling and the yield curve is flattening significantly in the past week.

Was the market so wrong-footed to begin with? I’m not so sure to be honest.

Whatever the case is, one thing that as a trader you can always rely on is to never discount the charts and never ignore what they are telling you.

It has been break after break of every key technical level and the next in-line now is the 200-day moving average (blue line). Let’s see how that holds up.

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