By: David Scutt, Market Analyst
The question of where U.S. 10-year yields will peak can turn into a guessing exercise. David Scutt’s analysis starts with major monthly swings since 2000 and tests whether candlestick reversals cluster around them. Clear reversal signals appeared within two months of 20 of 36 major turns, while many turns produced none. That pattern gives chart signals a limited but practical role, since a possible reversal still needs to be judged against fundamental drivers.
David Scutt, StoneX Media Market Analyst, assessed U.S. 10-year yield reversals across 36 major swings dating back to 2000. His historical comparison, paired with his focus on crude prices and the lower end of the U.S. yield curve, connects technical signals with the fundamental drivers he tracks.
U.S. 10-year yield signals need fundamental confirmation before traders treat a move as finished. Scutt explains, "I'm not looking at price action in isolation." He also points to recent work on the fairly persistent relationship between crude prices and the low end of the U.S. curve. Together, these inputs place candlestick patterns within a broader assessment of what may be driving yields. For market participants, this approach can help distinguish a possible reversal from a price move that lacks confirmation.
U.S. 10-year yield reversals have been followed by sizeable but varied moves in the historical sample. In 19 completed cases, the median move from the monthly signal close to the next obvious opposite swing was just over 88 basis points. Scutt reports that "16 of the 19 produced at least 50 basis points", while 14 delivered at least 75 and eight reached 100 or more. Bearish signals near yield highs were followed by a median decline of around 112 basis points, compared with a median rise of roughly 78 basis points after bullish signals near yield lows. The historical distribution, much of which sits within the long secular bull market in bonds before the pandemic, cautions against treating any one signal as a forecast.
--- Written by Frédéric Guétin, StoneX TV Producer
--- Expert: David Scutt, StoneX Media Market Analyst
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Candlestick reversals can help identify when a U.S. 10-year yield move may be turning, but they do not call the exact top or bottom. David Scutt argues that traders should weigh monthly price signals alongside fundamental drivers, including crude prices and the low end of the U.S. curve.
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