The fortnight preceding the Lunar New Year saw jittery stock markets keeping an eye on bond yields, wondering whether they should feel worried. For Chinese markets, the holiday might be a good time to take stock and see if the global dust settles. China’s 10-year sovereign bond yields soared to 4.12 per cent in January, having struggled at the 4 per cent area in the previous two months because this is a Fibonacci 61 per cent retracement from 2014’s high of 4.77 per cent, in turn lower than 2008’s high of 4.94 per cent and 2007’s at 5.05 per cent – a secular series of descending peaks. A close below the thin Ichimoku cloud and another below horizontal support at 3.87 per cent confirm a top in the yields, so futures prices should rally.
Nicole Elliott is a technical analyst