After strong showings on Friday, treasuries opened today with small bullish gaps carrying at least the 10 and 30-year yields through what figured to be strong resistance.
There has been no appreciable change in expectations for future rate cuts. I did see on Friday that there were doubts on Wall Street that the jobs report was accurate stemming from the fact that basically all the economists had been so wrong, and also that there had been large downward adjustments to last year's numbers. Monthly numbers are often revised the following month, and yearly numbers are always revised, so I'm not sure I'd agree with the reasoning.
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I didn't see anyone questioning the CPI number, which was also much better than expected and which also comes from the BLS, so with both nowhere near expectations, it seems to me that you should question both, or neither.
Treasuries rallied until nearly noon Friday at which point the 5-year yield was within 1.4 bps of the trendline drawn from May of 2023, the highest of the 3 trendlines I addressed in Friday's update which are all within a bp of one another. The 10-year yield traded through a trendline drawn from October of last year and 0.4 bps into a gap it had left on 12/1, while the 30-year yield broke through a trendline drawn from October of 2024 and into the gap it left on 12/1.
The opening trades this morning filled those gaps in the 10 and 30-year, but the 5-year yield has yet to break any of the 3 trendlines.
By all accounts, treasuries had great days on Friday, leaving both the daily and weekly charts looking very strong, and that seems to have been confirmed with this morning's openings, but what seems like the strongest of the resistance, that which is created by those 3 trendlines on the 5-year yield chart remains intact and while they can't hold forever, until they're broken, they are problematic.
