US 5yr yields set to resume higher

BofA Merrill Lynch notes in a report on Wednesday: 

• We remain bearish US Treasuries and short TYM5. Turning to 5yr yields, we look for a near term base from 1.572%/1.561% (6wk trendline resistance and the 21d), from which the larger bear trend resumes. 
  
  
• Odds favor a test and break of 1.722% (6m trendline support) through which exposes the confluence of long term support between 1.791%/1.879%. This could be the catalyst for 5s30s to resume its larger flattening t rend. 
  
  
• Today's break below 9wk Triangle/ contracting range support at 110.8bps says this long term flattening trend is resuming. Below the 106.6 (wave "d" and Feb-26 low) confirms a return to trend for a test and break of 100 and then 888bps. Above 119.4bps points to a larger range trade than anticipated.