(Bloomberg) -- Yields on 30-year Treasury bonds will extend a “short-term trend” lower that began last month, according to a Citigroup Inc. report citing technical indicators. The yield on the 30-year bond has fallen about 0.62 percentage points since reaching the high for the year of 4.84 percent on June 11, the day the government auctioned $11 billion of 30-year debt. The yield was little changed at 4.20 percent today, after touching 4.3 percent on July 10.“Having re-tested the 55-day moving average, now at 4.34 percent, the market posted a bearish engulfing day on Friday on the yield chart suggesting the short-term trend is still down,” Citigroup analysts including Tom Fitzpatrick in New York wrote today in a report. “Further falls in yields toward the head and shoulders target at 3.94 percent and then the 200-day moving average at 3.77 percent” are possible, they wrote.
The 30-year yield began a slide after the June 11 auction, as the higher yields lured robust demand. Indirect bidders, a class of investors that includes foreign central banks, bought the biggest percentage of so-called long bonds at an auction since the Treasury reintroduced the 30-year security in 2006. Bond yields have fallen the last four weeks as expectations for a U.S. economic recovery this year waned.Moving averages are used to identify trends and find support or resistance. Yield support is a level where sell orders may be clustered and yield resistance is where there may be buy orders. A head and shoulders is formed when the yield makes three consecutive peaks, with the middle being the highest.
In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index.
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