US Treasury yields have formed a technical pennant pattern in the past 12 months. That is, since late 2024/early 2025, they have made lower highs as well as higher lows. Friday last week, though, that all changed as the 10 year yield broke out to the downside (of that pattern, FIG 1).
That break was triggered by growing signs of weakness in the US economy. For the past 2½ years, cyclically sensitive sectors have felt the pinch of tight money (with housing and manufacturing, for example, in recession). The weakness in the economy, though, has now started to spread to the labour market, as highlighted by last week’s ‘jobs heavy’ macro data (including ‘job openings/JOLTS’ on Wednesday; ADP, Challenger job cuts, and weekly jobless claims on Thursday; & nonfarm payrolls on Friday). Much of that data missed expectations including, most notably, payrolls (with yields moving sharply lower on that data print).
That combination of a softening US economy, and a technical breakdown in yields, is clearly encouraging for Treasury bulls. Added to which, a number of medium term models are still close to their BUY thresholds and support the case for further upside in bond prices. Sentiment readings, for example, remain relatively bearish (having recently generated a contrarian BUY signal, see FIG 2), while the market remains net SHORT US Treasuries. Other (price based) indicators are starting to move higher/turn SELL (e.g. see FIG 3). All eyes, therefore, are on US macro data, particularly this week’s CPI report for August (due on Thursday).
FIG 1: US 10 year yield (%), shown with 50, 90, and 200 day moving averages
FIG 2: Sentiment1 towards US Treasuries vs. 10 year bond yield (NB scale INVERTED)
1 CONSENSUS Sentiment Index created by CONSENSUS, Inc. and is based on market opinion published by brokerage house analysts and independent advisory services. consensus-inc.com Tel: 816-373-3700.
FIG 3: Longview medium term technical scoring system vs. US 10y futures
(written 8th September 2025)