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Focus remains on rising risk-free rates as equities flounder

Goola Warden
Goola Warden • 3 min read
Focus remains on rising risk-free rates as equities flounder
Developed markets equities likely to be pressured by rising risk free rates which are higher for longer
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The 10-year US treasury yield (10Y) is at its highest level since the global financial crisis. The technical chart shows a very clear uptrend. If the uptrend accelerates, then it is likely to end soon, in exhaustion. But this is not the case currently.

Directional movement indicators, on the other hand, do look a trifle over-extended. ADX is at 48, which is high. The DIs are positively placed, suggesting that this indicator is becoming overbought. On the other hand, quarterly momentum is not overbought, and neither is 21-day RSI which is at 68.

In sum, technical indicators are mixed, and on balance they appear to be on the high side but not particularly overbought. This suggests that the 10Y could ease a bit, but would resume the uptrend following any temporary pause or pull-back.

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