The 10-year Treasury yield broke out of a descending wedge in late June and has tested strong resistance near 4.09%. The first attempt to break above was rejected. We expect support in the 3.65% - 3.75% area will be able to act as a floor for the next and likely successful break above 4.09% in the next attempt. A break above resistance at 4.09% will call for a rally to 4.34% and more likely closer to 4.82% before a possible top is in place.
Only an unexpected break below support at 3.57% will extend the corrective decline in wave 4, but we think that the odds for this outcome are very small.
