My guess is bond yields are heading much lower between now and September 11.
30-Year Long Bond Technical Position
Technically speaking, the long bond yield is right on support. Typically this is a spot where one would expect yields to bounce.
However, there have been four bounces off this level since late last year. I expect support to crumble in the wake of deteriorating economic data.
10-Year US Treasury Note Yield
10-year US Treasury Note Technical Position
The technical pattens of the 10-year Treasury note is the same as the 30-year long bond. The only difference is yields and support levels are lower on the 10-year note.
Fundamentally Speaking
Fundamentally, support levels will break sooner or later and I expect sooner, as in tomorrow.
A stronger reaction, and one I am more confident of, will happen with the next CPI release on September 11.
I anticipate a 50-basis point (0.5 percentage point) move lower on both within the next month or so.
Weakening Data Everywhere
September 2: In Honor of Labor Day, Let’s Review BLS Job Revisions
September 3: Construction Spending Growth Slows in May, Stops in June, Negative in July
September 5: Fed Beige Book Shows Flat or Declining Economy in 9 of 12 Fed Districts
September 5: Small Businesses Reducing Workers for the Last Four Months
Tomorrow the issues its monthly jobs reports.
In fourteen of the last 20 months the revisions have been negative. And if the report is good, there is no particular reason to believe it.
For discussion, please see A Breakdown, by Sector, of the Negative 818,000 BLS Job Revisions.
Expect more job weakness then a very rate cut friendly CPI report next week.