Quotes from BofA Merrill Lynch:
- Sell TYM5 at market (128-00), risk 129-02, target 124-15, potentially 124-15
- We turned bearish on Treasuries last week, looking for 10yr yields to break the 100d at 2.131% ahead of a push to 2.347%/2.428% and potentially beyond. Now, Elliott Wave analysis says that the 7d yield pullback into 1.840%/1.953% resistance looks to be completing and the larger bear trend is poised to resume.
- Further supportive of this bearish view is the turn in the weekly ADX and negative seasonality. Given this backdrop, we wish to sell the June Ten Year Note future at market for a resumption of this bear trend.
- Our downside target is 124-15/124-00, which is roughly equivalent to the 2.347%/2.428% zone. Our stop is just above 129-00, which equates to the 1.840% level in 10yr yields.
