FxWirePro: U.S. 10-year Treasury yield likely to rally up to 3.00 psychological level amid bounce in energy prices

The United States’ 10-year Treasury yield is expected to rally up to the 3.00 psychological mark, having already reached a 4-year high of 2.79 at the end of closing Friday amid a bounce in energy prices. This is, however, likely to lead to a dampening in risk sentiments across all markets; participants will still, remain cautious on the burgeoning developments in the geopolitical context and Middle East tensions, with a close eye on the greenback’s movement.

Crude oil prices have behaved quite abnormally in the recent past despite the surgical strikes over Syria and other Middle East and OPEC’s production-related tensions. President Donald Trump had tweeted last week "Oil Prices are artificially Very High!" which is of course not true.

As of Monday, prices remained range-bound, slightly on the lower scale, but are expected to rise going forward by taking into account a heavy net long position in non-commercial oil futures and a backwardation market, despite Trump’s notion of a bullish energy market, Scotiabank reported.

At 07:55GMT, Brent crude oil traded 0.27 percent lower at USD73.86 per barrel and the international benchmark West Texas Intermediate (WTI) slipped 0.44 percent to trade at USD98.10 per barrel on the New York Mercantile Exchange (NYMEX).

Meanwhile, in a scenario where rising bond yields will contribute to lower asset prices, owing to a strong dollar, healthy global demand and OPEC’s production cut deal have supported prices against market fundamentals.

However, the upcoming North-South Korea Summit is expected to infuse some optimism and recovery in global market sentiments, although it is still too early to infer anything.

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