Views & levels on major macro markets ahead of FOMC

BofA Merrill Lynch views:

US 2yr yields: 

• Bearish. Absent a sustained break of the 100d (57.2bps), stay bearish for 77.1bps (Dec'14 high) and beyond. Bulls need a break of the 5m t/line resistance (50.2bps) 

• Bullish. A break of 1.520% completes a small head-and-shoulders top, targeting 1.413% and, potentially, 1.355%. Back above 1.627% invalidates the bullish setup.  

• Bullish. The break of 2.040% turns the market near-term bullish, targeting 1.927% and potentially below, to 1.840%, before renewed basing. Back above 2.148% invalidates the bullish setup.  

• Bullish. The break of 2.633% clears the way for further yield downside to the Feb-26 low at 2.536% and potentially below, to 2.467%/2.436%. Back above 2.6335 indicates stalling, while bears need a break of 2.747%.  

• Bullish. The small Double Bottom in ESH5 from the 2038.25 low, which equates to the 100d avg. in the CASH (now 2050), keeps us near-term bullish for 2100 and potentially beyond, toward the Feb-25 high at 2117.75. Above 2082.50 confirms the bullish setup, while bears need a break of 2038.25 to gain control.  

• Correcting higher. The risk is for one more corrective squeeze higher to 1.0835 (congestion and retracement resistance) before the larger bear trend resumes for 1.0283 and potentially below. Back below 1.0564 (20 period MA on 240min charts) says the bear trend has resumed. 

• Bullish. The long-term bull trend has resumed for 124.16/124.59. We are long. Pullbacks should be limited to 120.26/119.87, while a break below 119.38 invalidates the bullish setup and points to renewed range trading.  

• Signs of basing. Evidence is growing for a base and turn higher. Above 1175 confirms the base, while a break of 1198/1214 targets 1307 and potentially beyond.