At the margin, evidence is beginning to turn a bit more bullish for the US Treasury market.
US 5yr yields are turning bullish and poised to complete a 2wk H&S top. This could be the bullish catalyst for the long end.
BofA Merrill Lynch notes in a report on Monday:
- While we are neutral on 10s and 30s, watching the very short term ranges of 2.040%/2.185% and 2.747%/2.633%, respectively, the 5yr point is beginning to turn more bullish.
- Indeed, a break of 1.526% would complete a 2wk Head and Shoulders Top, targeting 1.413% and potentially below to 1.355%.
- With 5s30s set to flatten further, a 5yr yield break of 1.526% could prove to be the catalyst for the long end of the curve to re-price lower in yield.


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