Chart Book

Chart of the day: Low rates to prevail in US

PUBLISHED : Tuesday, 04 April, 2017, 5:07pm
UPDATED : Tuesday, 04 April, 2017, 10:28pm

The voting members of the Federal Open Market Committee in the United States have for years been threatening to take interest rates back up to “normal” levels. This begs the questions of what is normal and why. Last month’s decision to increase their target rate by a further 25 basis points had been anticipated by bond vigilantes since August last year, with benchmark 30-year Treasury bond yields rallying from a record-low 2.09 per cent to 3.21 per cent, so that March’s candle is a shooting star (a reversal pattern). Its high almost coincides with 2015’s and Fibonacci 61 per cent retracement resistance. Coupled with a descending cloud and below secular channel resistance, it means we have not as yet reversed the well-established very long-term trend to lower interest rates.

Nicole Elliott is a technical analyst